BEA SYSTEMS INC
SB-2/A, 1997-03-20
COMPUTER PROGRAMMING SERVICES
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<PAGE>
   
     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 20, 1997
    
   
                                                      REGISTRATION NO. 333-20791
    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                 --------------
   
                                AMENDMENT NO. 1
                                       TO
                                   FORM SB-2
    
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                                 --------------
                               BEA SYSTEMS, INC.
 
                 (Name of small business issuer in its charter)
 
<TABLE>
<S>                              <C>                            <C>
           DELAWARE                       7372-9907                77-0394711
 (State or Other Jurisdiction    (Primary Standard Industrial   (I.R.S. Employer
              of                 Classification Code Number)     Identification
Incorporation or Organization)                                      Number)
</TABLE>
 
                       385 MOFFETT PARK DRIVE, SUITE 105
                        SUNNYVALE, CALIFORNIA 94089-1208
                                 (408) 743-4000
 
(Address and telephone number of principal executive offices and principal place
                                  of business)
                                ----------------
 
                             WILLIAM T. COLEMAN III
                CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
                       385 MOFFETT PARK DRIVE, SUITE 105
                        SUNNYVALE, CALIFORNIA 94089-1208
                                 (408) 743-4000
 
           (Name, address and telephone number of agent for service)
                                ----------------
 
                                   COPIES TO:
 
<TABLE>
<S>                                       <C>
      MICHAEL C. PHILLIPS, ESQ.                   BARRY E. TAYLOR, ESQ.
       KEVIN A. FAULKNER, ESQ.                   ROBERT G. O'CONNOR, ESQ.
         CORI M. ALLEN, ESQ.                      J. RANDALL LEWIS, ESQ.
       Morrison & Foerster LLP               Wilson Sonsini Goodrich & Rosati
          755 Page Mill Road                     Professional Corporation
       Palo Alto, CA 94304-1018                     650 Page Mill Road
                                                 Palo Alto, CA 94304-1050
</TABLE>
 
                                ----------------
 
                APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
  As soon as practicable after this Registration Statement becomes effective.
                                ----------------
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
 
    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
                                ----------------
 
   
                        CALCULATION OF REGISTRATION FEE
    
 
   
<TABLE>
<CAPTION>
                                                                                      PROPOSED MAXIMUM
                              TITLE OF EACH CLASS OF                                      AGGREGATE              AMOUNT OF
                           SECURITIES TO BE REGISTERED                                OFFERING PRICE(1)      REGISTRATION FEE
<S>                                                                                 <C>                    <C>
Common Stock, $.001 par value.....................................................       $43,125,000              $13,069
</TABLE>
    
 
   
(1) Estimated solely for the purpose of calculating the amount of the
    registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
    Includes $12,197 paid in connection with the initial filing.
    
                                 --------------
 
   
    THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
    
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
   
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
    
<PAGE>
   
                  SUBJECT TO COMPLETION, DATED MARCH 20, 1997
    
 
   
                                5,000,000 SHARES
    
 
       [LOGO]
                               BEA SYSTEMS, INC.
                                  COMMON STOCK
   
                          (PAR VALUE $0.001 PER SHARE)
    
 
                               ------------------
 
   
    All of the shares of Common Stock offered hereby are being sold by the
Company. See "Underwriting". Prior to this offering, there has been no public
market for the Common Stock of the Company. It is currently estimated that the
initial public offering price per share will be between $6.50 and $7.50. For
factors to be considered in determining the initial public offering price, see
"Underwriting".
    
 
   
    In connection with this offering, the Underwriters have reserved
approximately 535,714 shares of Common Stock for sale at the initial public
offering price to persons associated with the Company, including $2,000,000
worth of Common Stock (or approximately 285,714 shares based on an estimated
initial public offering price of $7.00 per share) that have been reserved for
sale to Digital Equipment Corporation in connection with the acquisition by the
Company of exclusive rights to certain products from Digital Equipment
Corporation.
    
 
    SEE "RISK FACTORS" ON PAGE 6 FOR CERTAIN CONSIDERATIONS RELEVANT TO AN
INVESTMENT IN THE COMMON STOCK.
 
   
    Application has been made to have the Common Stock approved for quotation on
the Nasdaq National Market under the symbol "BEAS".
    
 
                               ------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
  AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
    THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
     COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
           ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                               ------------------
 
   
<TABLE>
<CAPTION>
                                                                        INITIAL PUBLIC   UNDERWRITING     PROCEEDS TO
                                                                        OFFERING PRICE    DISCOUNT(1)      COMPANY(2)
                                                                       ----------------  -------------  ----------------
<S>                                                                    <C>               <C>            <C>
Per Share............................................................         $                $               $
Total(3).............................................................         $                $               $
</TABLE>
    
 
- --------------
 
(1) The Company has agreed to indemnify the Underwriters against certain
    liabilities, including liabilities under the Securities Act of 1933.
 
   
(2) Before deducting estimated expenses of $2,100,000 payable by the Company.
    
 
   
(3) The Company has granted the Underwriters an option for 30 days to purchase
    up to an additional 750,000 shares at the initial public offering price per
    share, less the underwriting discount, solely to cover over-allotments. If
    such option is exercised in full, the total initial public offering price,
    underwriting discount and proceeds to Company will be $         , $
    and $         , respectively. See "Underwriting".
    
 
                               ------------------
 
   
    The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
            , 1997 against payment therefor in immediately available funds.
    
 
GOLDMAN, SACHS & CO.
 
           ALEX. BROWN & SONS INCORPORATED
 
                           ROBERTSON, STEPHENS & COMPANY
 
                                                 SOUNDVIEW FINANCIAL GROUP, INC.
                                  ------------
 
   
               The date of this Prospectus is             , 1997.
    
<PAGE>
    Set forth on the left hand side of the inside front cover page are three
square boxes, side by side, each bearing the inscription "SERVER." Set forth on
top of these squares are twelve other squares of equal size, partially
overlapping each other and connected to the three other boxes by four lines
emanating from each square. Three of the twelve squares bear the inscription
"SERVER." Underneath the graphic is set forth the caption "BEFORE BEA."
 
    Set forth on the right hand side of the inside front cover is an identical
graphic, with the exception of a horizontal rectangular box bearing the caption
"BEA ENTERPRISE TRANSACTION FRAMEWORK" inserted between the lower three squares
and the other twelve squares. The three lower squares are connected to the
rectangular box by three lines, one emanating from each square. The twelve other
squares are connected to the rectangular box by twelve lines, one emanating from
each square. Underneath the graphic is set forth a caption which reads "AFTER
BEA."
 
    Above the two graphics across the length of the page is set forth the
caption "THE BEA ENTERPRISE MIDDLEWARE SOLUTION:." Underneath the two graphics,
across the length of the page is set forth the caption "SIMPLIFYING AND
PROVIDING RELIABILITY TO THE PROCESSING OF COMPLEX BUSINESS TRANSACTIONS." Below
this caption is set forth the following text: "Building, deploying, managing and
expanding distributed mission-critical computer software applications across
large enterprises is an increasingly important business requirement for large
organizations. By coordinating these applications among the many distributed
clients and servers supporting enterprise applications, the BEA Enterprise
Transaction Framework provides an integrated middleware platform that is
scalable, reliable, and flexible."
 
    The Company intends to furnish to its stockholders annual reports containing
audited consolidated financial statements and quarterly reports containing
unaudited consolidated financial information for the first three fiscal quarters
of each fiscal year of the Company.
 
                               ------------------
 
   
    CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN SUCH
SECURITIES, AND THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THE OFFERING.
SEE "UNDERWRITING".
    
 
                               ------------------
 
   
    BEA, BEA Builder, BEA Connect, BEA Jolt, BEA Manager, Enterprise Middleware
Solutions, BEA MessageQ, BEA ObjectBroker and Jolt are trademarks of the
Company. The Company has licensed worldwide rights to TUXEDO, which is a
registered trademark of Novell, Inc. in the United States and other countries.
This Prospectus contains other product names, trade names and trademarks of the
Company and of other organizations.
    
<PAGE>
    The inside cover gatefold is divided into two equal halves by a horizontal
bar containing the caption "BEA ENTERPRISE TRANSACTION FRAMEWORK." Above the bar
are set forth four clusters of pictures, connected to the dividing bar by four
lines, one emanating from each cluster. The cluster on the left consists of
three identical pictures, partially superimposed, depicting a man working on a
laptop computer. The cluster bears the captions "ELECTRONIC COMMERCE," "INTERNET
BROWSER" and "BEA JOLT." A cloud superimposed by a lightning symbol intersects
the line connecting the cluster to the dividing bar. To the right of this
cluster is set forth a second cluster consisting of two pictures, one of which
depicts a desktop computer and one of which depicts the interior of a warehouse.
This cluster bears the caption "MANUFACTURING," "PC CLIENT" and "BEA TUXEDO." To
the right of this cluster is set forth a third cluster consisting of a picture
of two persons sitting at a desk and talking, and a caption reading "HUMAN
RESOURCES," "PC CLIENT" and "BEA TUXEDO." The cluster on the right contains
three identical, partially superimposed pictures representing a mainframe
computer. The cluster bears the captions "MAINFRAME" and "DATABASES."
 
    Below the dividing bar are set forth five clusters of pictures, connected to
the dividing bar by five lines, one emanating from each cluster. The cluster on
the left consists of three identical, partially superimposed pictures of an
automated check-out counter and a hand sliding a credit card. This cluster bears
the captions "POINT OF SALE" and "PC CLIENT." To the right of this cluster is
set forth a second cluster consisting of a picture of a person working on a
laptop computer and the captions "THIRD PARTY SALES" and "PC CLIENT." To the
right of this cluster is set forth a third cluster depicting a CD superimposed
on a hundred dollar bill, an electronic ticker and a number of documents. The
cluster contains the captions "FINANCE," "PC CLIENT" and "BEA TUXEDO." To the
right of this cluster is set forth a cluster consisting of two pictures, one
depicting a person wearing a head-set and microphone and one depicting a laptop
computer. The cluster contains a caption reading "THIRD PARTY SALES" and "PC
CLIENT." The cluster on the right consists of three identical, partially
superimposed pictures of a computer room containing a number of servers. The
cluster contains the caption "UNIX, NT SERVERS" and "DATABASES."
 
    Set forth in the upper left-hand corner of the gatefold is a caption reading
"LARGE ORGANIZATIONS USE BEA'S MIDDLEWARE AS THE PLATFORM TO RUN THEIR MOST
CRITICAL APPLICATIONS."
 
    In the upper right-hand corner of the gatefold is set forth the following
text: "BEA's products and services are used as the software infrastructure to
support and integrate a company's most important business applications. Using
the BEA Enterprise Transaction Framework as the infrastructure for its
applications, a company provides its business applications with transaction
integrity and security, and integration with widely disparate database, client,
and server technologies. This infrastructure can be used in a wide variety of
distributed computing environments from legacy mainframes to internet clients.
The BEA solution also provides highly scalable technology to handle thousands of
users simultaneously, and integration with packaged software including those
that use BEA's middleware."
<PAGE>
                               PROSPECTUS SUMMARY
 
   
    THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS AND THE NOTES THERETO
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE
INFORMATION IN THIS PROSPECTUS (I) INCLUDES AS COMMON STOCK 29,406,982 SHARES OF
NONVOTING CLASS B COMMON STOCK INTO WHICH CERTAIN SHARES OF PREFERRED STOCK WILL
BE CONVERTED AND REFLECTS THE CONVERSION OF ALL REMAINING OUTSTANDING SHARES OF
PREFERRED STOCK AND A CONVERTIBLE LOAN INTO SHARES OF COMMON STOCK EFFECTIVE
UPON THE CLOSING OF THE OFFERING AND (II) ASSUMES NO EXERCISE OF THE
UNDERWRITERS' OVER-ALLOTMENT OPTION. SEE "CERTAIN TRANSACTIONS--WARBURG LINE OF
CREDIT," "DESCRIPTION OF CAPITAL STOCK" AND "UNDERWRITING."
    
 
                                  THE COMPANY
 
   
    BEA Systems, Inc. ("BEA" or the "Company") designs, develops, markets and
supports software used by large organizations to enable and support their most
critical business processes. The Company's Enterprise Transaction Framework is
an open, integrated middleware software platform for developing, deploying and
managing distributed mission-critical computer software applications. The core
of the BEA Enterprise Transaction Framework is BEA TUXEDO, a software engine
that manages transactions and communications for enterprise-wide applications,
enabling organizations to realize the benefits offered by distributed computing
environments while preserving the traditional advantages of mainframe-based
systems. BEA products provide a middleware software infrastructure that supports
thousands of simultaneous users distributed worldwide. With the pending
acquisition of exclusive rights to MessageQ and ObjectBroker from Digital
Equipment Corporation ("Digital"), the Company is seeking to extend its
Enterprise Transaction Framework to incorporate comprehensive message-oriented
middleware for application integration and new object-oriented technologies. In
addition to its software products, BEA provides its customers with complete
solutions through a range of professional services offerings.
    
 
   
    BEA's products are marketed and sold worldwide, principally through the
Company's direct sales force and also indirectly through third parties. BEA's
products have been adopted in a wide variety of industries, including
telecommunications, banking and finance, manufacturing, retail, technology and
transportation. During the fiscal year ended January 31, 1997, BEA sold new
product licenses to over 170 customers, including over 100 customers that were
newly-developed by the Company. The total number of customers using products
that have been acquired and developed by BEA is greater than 600 worldwide.
These customers include: The AT&T Corp., Bell Communications Research, Inc.,
Damark International Inc., Discover Card Trust, Federal Express Corp., Fidelity
Investments, Gap Inc., J.J. Kenney, McKesson Corp., Motorola Inc., Nippon
Telephone & Telegraph, Northwest Airlines Corp., U.K. Employment Services, Union
Bank of Switzerland, Union Pacific Railroad and Walgreens Co. In addition,
independent software vendors ("ISVs"), such as PeopleSoft Inc. and Clarify,
Inc., embed BEA TUXEDO into their own product offerings in order to improve the
scalability, portability and interoperability of their products.
    
 
    Over the past decade, the information systems of many organizations have
been evolving from traditional mainframe systems to distributed computing
environments. This evolution has been driven by the benefits offered by
distributed computing, including lower incremental technology costs, faster
application development and deployment, increased flexibility and improved
access to business information. However, the inherent technical and business
limitations of distributed computing have generally precluded its use for
complex, large-scale, mission-critical applications, such as airline
reservations, credit card processing and customer billing and support systems,
that enable and support fundamental business processes. These shortcomings
include the limited scalability, reliability and interoperability of distributed
computing environments. In addition, it has been difficult to integrate
distributed computing technologies with existing mission-critical applications,
limiting organizations' ability to leverage their substantial investments in
legacy systems and existing personnel and skills.
 
    BEA's products and services enable companies to overcome the limitations of
distributed computing for mission-critical applications. BEA's Enterprise
Transaction Framework, based upon time-tested and market-proven BEA TUXEDO
technology, provides a middleware solution that addresses the scalability,
manageability, platform independence, interoperability, integrity, reliability
and security requirements of complex, large-scale, distributed computing in the
heterogeneous environments present in most major organizations. The BEA solution
allows companies to leverage their substantial
 
                                       3
<PAGE>
   
investments in legacy systems, significantly extending the useful lives of
mainframe and programmer assets while exploiting the benefits offered by
distributed computing. The incorporation of MessageQ and ObjectBroker into the
Enterprise Transaction Framework will extend its capabilities to include
message-oriented middleware-based and object-oriented programming methodologies.
    
 
    The Company's objective is to establish its middleware solutions as the
industry standard for developing, deploying and managing distributed
mission-critical applications. To this end, BEA intends to enhance its
technological leadership by adding new functionality to its products; expand its
global distribution facilities to complement its direct sales, services,
training and support capabilities; promote the embedding of BEA TUXEDO into the
product offerings of ISVs to accelerate the acceptance of its products; leverage
strategic partnerships to augment the efforts of its direct sales force; and
provide the software and services necessary to conduct safe, reliable
transactions over the Internet.
 
   
    The Company acquired worldwide exclusive rights to TUXEDO from Novell, Inc.
in February 1996, acquired Information Management Company and Independence
Technologies, Inc., two leading distributors of TUXEDO, in September 1995 and
November 1995, respectively, and acquired a number of other TUXEDO distribution,
sales and support organizations between May 1996 and December 1996. Such
acquisitions are referred to herein as the "Acquisitions." In addition, in
January 1997, the Company agreed to acquire exclusive rights to MessageQ,
ObjectBroker and other related products from Digital. The Company currently
anticipates that this acquisition will close on or about March 26, 1997. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations-- Company Background" and Note 13 of Notes to BEA Systems, Inc.
Consolidated Financial Statements.
    
 
   
    The Company was incorporated in Delaware in January 1995 under the name BEA
Enterprises, Inc. and changed its name to BEA Systems, Inc. in September 1995.
References herein to "BEA" or the "Company" refer to BEA Systems, Inc., its
subsidiaries and predecessor entities acquired in the Acquisitions. The
Company's headquarters are located at 385 Moffett Park Drive, Sunnyvale,
California 94089-1208, and its telephone number is (408) 743-4000.
    
 
                                  RISK FACTORS
 
    For a discussion of considerations relevant to an investment in the Common
Stock, see "Risk Factors."
 
   
                                  THE OFFERING
    
 
   
<TABLE>
<S>                                            <C>
Common Stock offered by the Company..........  5,000,000 shares(1)
Common Stock to be outstanding after the
 Offering....................................  53,425,363 shares(1)(2)
Use of proceeds..............................  For repayment of certain borrowings under a
                                               credit line and payment of certain
                                               obligations incurred in connection with the
                                               Acquisitions and, if consummated, the Digital
                                               acquisition, for possible future acquisitions
                                               and for working capital and general corporate
                                               purposes. See "Use of Proceeds."
Proposed Nasdaq National Market symbol.......  BEAS
</TABLE>
    
 
- --------------
   
(1) Excludes 750,000 shares issuable upon exercise of the Underwriters'
    overallotment option.
    
   
(2) Based on the number of shares of Common Stock outstanding as of January 31,
    1997, as calculated on a pro forma basis to give effect to the conversion of
    all shares of Preferred Stock and a convertible loan upon completion of the
    offering based on an assumed initial public offering price of $7.00.
    Excludes (i) 6,681,288 shares issuable upon exercise of options outstanding
    as of January 31, 1997, having a weighted average exercise price of $0.996
    per share, under the Company's 1995 Flexible Stock Incentive Plan, and (ii)
    6,350,000 additional shares authorized for issuance under the Company's 1997
    Stock Incentive Plan and 1997 Employee Stock Purchase Plan (collectively,
    the "Stock Plans"). See "Management--Stock Plans" and Notes 11 and 14 of
    Notes to BEA Systems, Inc. Consolidated Financial Statements.
    
 
                                       4
<PAGE>
                   SUMMARY CONSOLIDATED FINANCIAL INFORMATION
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
   
<TABLE>
<CAPTION>
                                                                                          YEAR ENDED JANUARY 31,
                                                                                        --------------------------
                                                                                          1996(1)         1997
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
  Revenues:
    License Revenues..................................................................   $    3,569    $   46,839
    Service Revenues..................................................................        1,564        14,759
                                                                                        ------------  ------------
      Total Revenues(2)...............................................................        5,133        61,598
  Total Cost of Revenues(3)...........................................................        2,704        18,607
                                                                                        ------------  ------------
  Gross Margin........................................................................        2,429        42,991
 
  Operating Expenses:
    Research and Development..........................................................        3,244        18,183
    Sales and Marketing...............................................................        2,572        30,970
    General and Administrative........................................................        3,058        12,732
    Write-Off of In-Process Research and Development..................................       11,194        62,248
                                                                                        ------------  ------------
      Total Operating Expenses........................................................       20,068       124,133
                                                                                        ------------  ------------
 
  Income (Loss) from Operations.......................................................      (17,639)      (81,142)
  Other Income (Expense)..............................................................           48             4
  Interest Expense....................................................................          (89)       (6,727)
                                                                                        ------------  ------------
  Income (Loss) before Income Taxes...................................................      (17,680)      (87,865)
  Provision for Income Taxes..........................................................           60           800
                                                                                        ------------  ------------
  Net Income (Loss)...................................................................   $  (17,740)   $  (88,665)
                                                                                        ------------  ------------
                                                                                        ------------  ------------
  Pro Forma Net Income (Loss) Per Share(4)............................................                 $    (1.73)
                                                                                                      ------------
                                                                                                      ------------
  Shares Used in Computing Pro Forma Net Income (Loss) Per Share(4)...................                     51,162
                                                                                                      ------------
                                                                                                      ------------
 
<CAPTION>
 
                                                                                             JANUARY 31, 1997
                                                                                        --------------------------
                                                                                                           AS
                                                                                           ACTUAL     ADJUSTED(5)
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
CONSOLIDATED BALANCE SHEET DATA:
  Cash and Cash Equivalents...........................................................   $    3,283    $   20,094
  Working Capital Deficit.............................................................      (32,798)       (6,937)
  Total Assets........................................................................       57,973        74,784
  Long-Term Obligations (Less Current Portion)........................................       49,540        43,951
  Stockholders' Equity (Deficit)......................................................      (76,289)      (24,059)
</TABLE>
    
 
- ------------------
 
   
(1) The consolidated statement of operations data for the year ended January 31,
    1996 includes results of operations from incorporation (January 20, 1995)
    through January 31, 1995.
    
 
   
(2) If the acquisitions of IMC, ITI, TUXEDO and USL France had occurred on
    February 1, 1995, the pro forma revenues would have been $33.6 million and
    $62.5 million for the years ended January 31, 1996 and 1997, respectively.
    See "Management's Discussion and Analysis of Financial Condition and Results
    of Operations."
    
 
   
(3) Includes expenses attributable to amortization of intangible assets
    resulting from acquisitions in the amounts of $1.0 million and $8.6 million
    for the years ended January 31, 1996 and 1997, respectively.
    
 
   
(4) See Note 1 of Notes to BEA Systems, Inc. Consolidated Financial Statements
    for an explanation of the method used to determine the number of shares used
    in computing pro forma net income (loss) per share.
    
 
   
(5) Adjusted to reflect the sale of 5,000,000 shares offered by the Company
    hereby, based on an assumed initial public offering price of $7.00 per share
    and the application of the estimated net proceeds therefrom. Includes the
    effect of conversion of all Preferred Stock and the convertible loan into
    Common Stock at the closing of the offering. See "Certain Transactions--
    Warburg Line of Credit."
    
 
                                       5
<PAGE>
                                  RISK FACTORS
 
   
    IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN EVALUATING AN INVESTMENT
IN THE COMMON STOCK OFFERED HEREBY. THIS PROSPECTUS CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS, WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED, INCLUDING STATEMENTS REGARDING (I) THE CLOSING OF THE DIGITAL
TRANSACTION AND THE EXPECTED IMPACT OF THE DIGITAL TRANSACTION ON THE COMPANY'S
OPERATING RESULTS AND FINANCIAL CONDITION; (II) THE EXPECTED INCREASES IN
LICENSE AND SERVICE REVENUES IN FUTURE PERIODS; (III) THE PLANNED EXPANSION OF
THE COMPANY'S SALES, MARKETING AND RESEARCH AND DEVELOPMENT ORGANIZATIONS; AND
(IV) THE SUFFICIENCY OF THE COMPANY'S CURRENT CASH BALANCES, BORROWINGS
AVAILABLE UNDER ITS LINES OF CREDIT AND CASH FLOW FROM OPERATIONS TO MEET ITS
WORKING CAPITAL REQUIREMENTS. THESE STATEMENTS INVOLVE RISKS AND UNCERTAINTIES
AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM SUCH RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN OF THE RISK FACTORS SET FORTH
BELOW AND FOR THE REASONS DESCRIBED ELSEWHERE IN THIS PROSPECTUS.
    
 
LIMITED OPERATING HISTORY; NO ASSURANCE OF PROFITABILITY
 
   
    The Company was incorporated in January 1995 and, accordingly, has a limited
operating history upon which an evaluation of the Company and its prospects can
be based. Revenues generated by the Company to date have been derived primarily
from sales of BEA TUXEDO, a product to which the Company acquired worldwide
rights in February 1996, and from fees for related services. Since its
inception, the Company has acquired a number of businesses and other products in
addition to BEA TUXEDO. Prior to the consummation of these acquisitions, the
Company had no revenues and limited business activities. Accordingly, the
Company is subject to the risks inherent both in the operation of a new business
enterprise and the integration of a number of previously separate and
independent business operations, and there can be no assurance that the Company
will be able to address these risks successfully. Although the Company has
experienced recent substantial revenue growth, the Company has incurred
significant net losses since its inception, including losses of approximately
$17.7 million and $88.7 million during the fiscal years ended January 31, 1996
and 1997, respectively. At January 31, 1997, the Company had an accumulated
deficit of approximately $107.3 million. In addition, in connection with certain
acquisitions, the Company recorded approximately $100.6 million as intangible
assets, approximately $83.4 million of which has already been amortized and
expensed and approximately $17.2 million of which is expected to be amortized
and expensed in future periods through the Company's fiscal year ending January
31, 2001. The amounts of such intangible assets to be expensed in future
periods, which will not be separately reported but will be included primarily in
cost of sales, are expected to be $2.5 million per fiscal quarter in 1997 and
are expected to average $1.4 million per fiscal quarter in 1998. If the pending
acquisition of exclusive rights to certain products from Digital is consummated,
as the Company anticipates, the amounts currently expected to be expensed are
estimated to increase by approximately $0.4 to $0.6 million per fiscal quarter
in 1997 and 1998, in addition to an estimated charge ranging from approximately
$14 million to $16 million in the fiscal quarter in which the closing occurs for
write-off of purchased in-process research and development. To the extent the
Company makes additional acquisitions of businesses, products and technologies
in the future, the Company may report additional, potentially significant,
amortization expenses related thereto. To the extent future events result in the
impairment of any capitalized intangible assets, amortization expenses may occur
sooner than the Company expects. For the foregoing reasons, there can be no
assurance that the Company will be profitable in any future period, and recent
operating results should not be considered indicative of future financial
performance. See "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
    
 
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
 
    The Company expects that it will experience significant fluctuations in
future quarterly operating results as a result of many factors, including, among
others: the size and timing of orders; introduction or
 
                                       6
<PAGE>
enhancement of products by the Company or its competitors; market acceptance of
middleware products; the lengthy sales and implementation cycle for the
Company's products and the potential for significant delays; market acceptance
of new products and product enhancements; technological changes in computer
systems and environments; the structure and timing of future acquisitions of
businesses, products and technologies, if any; increased competition; the
ability of the Company to develop, introduce and market new products on a timely
basis; changes in the Company's or its competitors' pricing policies; customer
order deferrals in anticipation of future new products and product enhancements,
if any; the Company's success in expanding its sales and marketing programs; mix
of products and services sold; mix of distribution channels; ability to meet the
service requirements of its customers; costs associated with acquisitions; loss
of key personnel; fluctuations in foreign currency exchange rates; and general
economic conditions. As a result of all of these factors, the Company believes
that quarterly revenues and operating results are difficult to forecast and
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
 
    Because the Company generally ships software products within a short period
after receipt of an order, it will not at any given time have a material backlog
of unfilled orders, and revenues in any quarter will be substantially dependent
on orders booked and shipped in that quarter. In addition, the Company
historically has recognized, and expects to continue to recognize, a significant
portion of license revenue in the last month of each fiscal quarter. The Company
anticipates that it will derive a substantial portion of its revenues from
increasingly large orders, as customers deploy BEA products throughout their
organizations. Any inability of the Company to generate large orders, or any
delay or loss of such orders in a particular quarter, will materially adversely
affect the Company's revenues and, more significantly on a percentage basis, its
net income or loss in that quarter. The Company's expense levels are based, in
part, on its expectations of future revenues. The Company expects to increase
expense levels in each of the next several quarters, primarily to support
increased sales, services and customer support efforts and research and
development efforts, and to build greater infrastructure in its international
offices, particularly in finance and administration functions. The Company is
generally unable to reduce expenses significantly in the short term to
compensate for any unexpected revenue shortfall. Accordingly, any significant
shortfall of revenues in relation to the Company's expectations or any material
delay of large orders would have a material adverse effect on the Company's
business, operating results and financial condition. Due to all the foregoing
factors, it is likely that in some future quarters the Company's operating
results will not meet the expectations of public stock market analysts and
investors. As a result, the market price of the Company's Common Stock would be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
PRODUCT CONCENTRATION; DEPENDENCE ON GROWTH OF MARKET FOR MIDDLEWARE; NOVELL
  RELATIONSHIP
 
    Revenues generated by the Company to date have been derived primarily from
sales of BEA TUXEDO, a product to which the Company acquired worldwide rights in
February 1996, and from fees for related services. These products and services
are expected to continue to account for a substantial majority of the Company's
revenues for the foreseeable future. As a result, factors adversely affecting
the pricing of or demand for BEA TUXEDO, such as competition or technological
change, could have a material adverse effect on the Company's business,
operating results and financial condition. The Company's success is dependent in
significant part on the Company's middleware software products achieving market
acceptance by large organizations with substantial legacy mainframe systems. All
of the Company's business is in the market for middleware and related services,
which is still an emerging market that is characterized by continuing
technological developments, evolving industry standards and changing customer
requirements. The Company's future financial performance will depend in large
part on continued growth in the number of companies extending their
mainframe-based, mission-critical applications to an enterprise-wide distributed
computing environment through the use of middleware technology. There can be no
assurance that the market for middleware technology and related services will
continue to grow. If the middleware market fails to grow or grows more slowly
than the Company
 
                                       7
<PAGE>
currently anticipates, or if the Company experiences increased competition in
this market, the Company's business, operating results and financial condition
will be materially adversely affected.
 
   
    Under the terms of the Company's license agreement with Novell, Inc.
("Novell") for the BEA TUXEDO product (the "Novell Agreement"), the Company is
required to make aggregate annual payments to Novell of $32 million and $33
million during the calendar years 1997 and 1998, respectively, and, to acquire
perpetual rights to TUXEDO, a final payment of $12 million in January 1999. In
connection with the Novell Agreement, Warburg, Pincus Ventures, L.P., the
Company's principal stockholder, has guaranteed payment obligations to Novell.
See Note 6 of Notes to BEA Systems, Inc. Consolidated Financial Statements. In
addition, the Novell Agreement requires BEA to employ at least 47 developers
devoted to BEA TUXEDO product development at December 31, 1997 and 62 such
developers at December 31, 1998. There can be no assurance that the Company will
employ the required minimum number of BEA TUXEDO developers. Any failure to make
the required payments or any failure by the Company to achieve minimum
contractual employment levels under the Novell Agreement would result in a loss
of the Company's rights to BEA TUXEDO, which would have a material adverse
effect on the Company's business, operating results and financial condition. See
"--Substantial Future Capital Needs," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Products."
    
 
LENGTHY SALES AND IMPLEMENTATION CYCLE
 
   
    The Company's products are typically used to integrate applications that are
critical to a customer's business, and the purchase of the Company's products is
often part of a customer's implementation of a distributed computing
environment. In such cases, the sales and implementation of the Company's
middleware software products are included in a larger decision-making process
within a customer's organization which can cause orders of the Company's
products to be delayed or be subject to numerous factors beyond the Company's
control. During the fiscal year ended January 31, 1997, license fees per
customer for BEA products generally ranged from $84,000 to $2.6 million and
averaged approximately $395,000. The Company expects that licenses for BEA
TUXEDO will increase in size and the implementation of the Company's products
will become more complex as customers use BEA TUXEDO for larger and more
sophisticated installations. For these and other reasons, the sales and
implementation cycle associated with the licensing of the Company's products is
very lengthy and is subject to a number of significant delays over which the
Company has little or no control. Following the signing of a license contract
for BEA products, a customer's implementation consists of a pre-deployment and a
deployment phase. Approximately 10 to 30 percent of the revenues from most
customers is realized during the pre-deployment phase and is usually weighted
toward professional services and training. The remaining portion of revenues is
realized during the deployment stage and predominantly consists of license fees.
While the sales and implementation cycle varies substantially from customer to
customer, for initial sales it has ranged from 18 to 24 months from the initial
contact to the completion of the deployment phase. Any significant or ongoing
failure by the Company to achieve such sales or any delays in the implementation
process could have a material adverse effect on the Company's business,
operating results and financial condition. See "Business--Sales, Marketing and
Services."
    
 
COMPETITION
 
    The market for middleware software and related services is highly
competitive. The Company's competitors are diverse and offer a variety of
solutions directed at various segments of the middleware software marketplace.
These competitors include database vendors such as Oracle Corporation
("Oracle"), IBM Corporation ("IBM") and others, which offer their own
development tools for use with their proprietary databases, as well as companies
offering and developing middleware software products and related services or
application development tools that compete with products offered by the Company.
In addition, internal development groups within prospective customers'
organizations may develop software and hardware systems that may substitute for
those offered by the Company. A
 
                                       8
<PAGE>
number of the Company's competitors and potential competitors have longer
operating histories, significantly greater financial, technical, marketing and
other resources, greater name recognition and a larger installed base of
customers than the Company.
 
    The Company's principal competitors currently are database vendors that
advocate client/server networks driven by the database server and software tool
vendors that offer development tools designed to enable customers to create
distributed mission-critical applications. Oracle is the primary relational
database vendor offering products that are intended to serve as alternatives to
the Company's enterprise middleware solutions. Currently, the software
development tool vendors typically emphasize the broad versatility of their
toolsets and, in some cases, offer complementary middleware software that
supports these tools and performs messaging and other basic middleware
functions. There can be no assurance that the Company will compete successfully
with database vendors and software tool vendors, or that the products offered by
such vendors will not achieve greater market acceptance than the Company's
products.
 
    Microsoft has announced that it will provide middleware functionality in
future versions of its Windows NT operating system and has recently announced
the release of a product that includes certain middleware functionality. The
bundling of middleware functionality in Windows NT will require the Company to
compete with Microsoft in the Windows NT marketplace, where Microsoft will have
certain inherent advantages due to its significantly greater financial,
technical, marketing and other resources, greater name recognition, its
substantial installed base and the integration of its enterprise middleware
functionality with Windows NT. If Microsoft successfully incorporates middleware
functionality into Windows NT or separately offers middleware applications, the
Company will need to differentiate its products based on functionality,
interoperability with non-Microsoft platforms, performance and reliability and
establish its products as more effective solutions to customers' needs. There
can be no assurance that the Company will be able to successfully differentiate
its products from those offered by Microsoft, or that Microsoft's entry into the
middleware market will not materially adversely affect the Company's business,
operating results and financial condition.
 
   
    In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties, thereby increasing the ability of their products to address the
needs of the Company's current and prospective customers. Accordingly, it is
possible that new competitors or alliances among current and new competitors may
emerge and rapidly gain significant market share. Such competition could
materially adversely affect the Company's ability to sell additional licenses
and maintenance and support renewals on terms favorable to the Company. Further,
competitive pressures could require the Company to reduce the price of its
products and related services, which could materially adversely affect the
Company's business, operating results and financial condition. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors, and the failure to do so would have a material adverse
effect upon the Company's business, operating results and financial condition.
See "Business-- Competition."
    
 
PAST AND FUTURE ACQUISITIONS
 
   
    From its inception in January 1995 through January 31, 1997, the Company
concluded the acquisition of eight companies, divisions or products. Pursuant to
an agreement entered into with Digital in January 1997 (the "Digital
Agreement"), the Company has agreed to acquire exclusive rights to certain
software products developed by Digital. The Company expects to close this
transaction on or about March 26, 1997. Although the Company anticipates that
the integration of acquired companies, divisions or products will not adversely
affect the Company's operating results, this integration will involve the
assimilation of conflicting operations and products, which will divert the
attention of the Company's management team and may have a material adverse
effect on the Company's operating results in future quarters. In addition, in
connection with the acquisition of certain companies, divisions or products, the
Company is required to make certain future payments. Under the Novell Agreement,
the Company is obligated to make aggregate annual payments to Novell of $32
million and $33 million
    
 
                                       9
<PAGE>
   
during the calendar years 1997 and 1998 and a final payment of $12 million in
January 1999 in connection with the Company's acquisition of TUXEDO. Under the
Digital Agreement, the Company will be obligated following the closing of the
transaction to make aggregate payments to Digital of $22 million through
February 2000. Within 30 days of the consummation of this offering, the Company
will be obligated to pay $5 million to Digital. On or before February 1, 1998,
1999 and 2000, BEA will be obligated to make payments to Digital of $2 million,
$4 million and $11 million, respectively; however, at Digital's election,
certain portions of these payments may be converted into shares of the Company's
Common Stock at prices ranging from 1.5 to 2.5 times the initial public offering
price. Any failure to make such payments or otherwise perform the Company's
other continuing obligations relative to these acquisitions would result in the
Company's loss of certain of its rights in the acquired businesses or products
and would have a material adverse effect on the Company's business, operating
results and financial condition. The Company intends to make additional
acquisitions in the future, although there can be no assurance that suitable
companies, divisions or products will be available for acquisition. Such
acquisitions entail numerous risks, including an inability to successfully
assimilate acquired operations and products, diversion of management's
attention, difficulties and uncertainties in transitioning the business
relationships from the acquired entity to the Company and loss of key employees
of acquired companies. In addition, future acquisitions by the Company may
result in dilutive issuances of equity securities, the incurrence of debt, large
one-time expenses, and the creation of goodwill or other intangible assets that
could result in significant amortization expense. These factors could have a
material adverse effect on the Company's business, operating results and
financial condition. See "--Product Concentration; Dependence on Growth of
Market for Middleware; Novell Relationship," "--Substantial Future Capital
Needs," "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and Note 2 of Notes to BEA Systems, Inc. Consolidated Financial
Statements.
    
 
MANAGEMENT OF GROWTH
 
   
    The Company currently is experiencing a period of rapid and substantial
growth that has placed, and is expected to continue to place, a strain on the
Company's administrative, financial and operational resources. The Company's
revenues have increased from $5.1 million for the fiscal year ended January 31,
1996 to $61.6 million for the fiscal year ended January 31, 1997, and the number
of Company employees has increased from 120 employees in three offices in the
United States at January 31, 1996 to 459 employees in 28 offices in 15 countries
at January 31, 1997. In addition, following the closing of the Digital
transaction, the Company expects to add a total of approximately 90 employees
and consultants who had responsibility for the development of the products to be
acquired from Digital. The Company's ability to manage its staff and growth
effectively will require it to continue to improve its operational, financial
and management controls, reporting systems and procedures, to train, motivate
and manage its employees and, as required, to install new management information
and control systems. In that regard, the Company is currently installing and
implementing a new management information system that is designed to integrate
financial and other reporting among the Company's multiple domestic and foreign
offices. In addition, the Company intends to significantly increase its
administrative staff in its foreign offices, particularly in the area of
finance, and to improve financial reporting and controls for the Company's
international operations. There can be no assurance that the Company will be
able to implement improvements to its management information and control systems
in an efficient or timely manner or that, during the course of this
implementation, deficiencies in existing systems and controls will not be
discovered. If management of the Company is unable to manage growth effectively,
the Company's business, operating results and financial condition will be
materially adversely affected. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
    
 
   
USE OF PROCEEDS TO PAY CERTAIN OUTSTANDING INDEBTEDNESS AND ACQUISITION
  OBLIGATIONS
    
 
   
    The net proceeds of the offering are expected to be used for repayment of
amounts borrowed by the Company under its revolving credit line and for the
payment of certain obligations incurred in connection
    
 
                                       10
<PAGE>
   
with the Acquisitions. Depending upon the level of the Company's borrowings
thereunder, up to $10 million will be used to repay the outstanding borrowings
under the revolving credit line. As of February 28, 1997, the Company had
outstanding borrowings of approximately $8.3 million under the revolving credit
line. Approximately $4.6 million will be used to repay the entire amount due at
the offering under an 8% note issued by the Company to the founders of an
operating subsidiary acquired by the Company in September 1995. Assuming that
the Digital transaction closes, the Company will be obligated to make $5 million
in payments to Digital, $3 million of which will be due on June 20, 1997 and $2
million of which will be due on the earlier of June 20, 1997 or 10 days after
the purchase by Digital of $2 million worth of Common Stock offered hereby. The
$12.6 million balance of the net proceeds is expected to be used to make
payments toward the $32 million due to Novell in calendar year 1997. See
"--Substantial Future Capital Needs," "Use of Proceeds" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
    
 
SUBSTANTIAL FUTURE CAPITAL NEEDS
 
   
    The Company will require substantial additional funds to satisfy its payment
obligations to Novell related to its acquisition of TUXEDO. Under the Novell
Agreement, the Company is required to make aggregate payments of $32 million and
$33 million during the years ended December 31, 1997 and 1998, respectively,
and, to acquire perpetual rights to TUXEDO, a final payment of $12 million in
January 1999. Payment obligations have been guaranteed by the Company's
principal stockholder, Warburg, Pincus Ventures L.P. ("Warburg"). See Note 6 of
Notes to BEA Systems, Inc. Consolidated Financial Statements. Under the Digital
Agreement, the Company will be obligated following the closing of that
transaction to make aggregate payments of $22 million through February 2000. As
of January 31, 1997, the Company had $3.3 million in cash, cash equivalents and
short-term investments. The Company believes that the net proceeds of the
offering, together with its cash, cash equivalents and short-term investments,
the Warburg guaranty, available borrowings under its lines of credit and cash
from operations, will be sufficient to meet its working capital requirements,
including the payment obligations under the Novell Agreement, through at least
January 31, 1998. Thereafter, the Company expects that it will require
substantial additional capital to meet its $33 million and $12 million payment
obligations to Novell in 1998 and January 1999, respectively, and its aggregate
payment obligations to Digital of up to $17 million through February 1, 2000,
including an $11 million payment due on or before February 1, 2000. Depending
upon the Company's success in achieving continued revenue growth from sales of
BEA TUXEDO and services related thereto and the extent to which Digital elects
not to convert payment amounts due into shares of the Company's Common Stock,
the Company may require additional equity or debt financing earlier than
currently anticipated in order to fund its working capital and other
requirements. There can be no assurance that additional financing will be
available or, if available, that it will be on terms satisfactory to the
Company. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
    
 
   
DEPENDENCE ON KEY PERSONNEL AND NEED TO HIRE ADDITIONAL PERSONNEL
    
 
   
    The Company's future performance depends to a significant degree upon the
continued service of its key members of management, as well as marketing, sales,
consulting and product development personnel. The loss of any of William T.
Coleman III, the Company's President, Chairman and Chief Executive Officer,
Edward W. Scott, Jr., the Company's Executive Vice President of Worldwide Field
Operations, or Alfred S. Chuang, the Company's Chief Technical Officer and
Executive Vice President of Product Development, or one or more of the Company's
other key personnel, would have a material adverse effect on the Company's
business, operating results and financial condition. The Company believes its
future success will also depend in large part upon its ability to attract and
retain highly skilled management, marketing, sales, consulting and product
development personnel. Competition for such personnel is intense, and there can
be no assurance that the Company will be able to retain its key employees or
that it will be successful in attracting, assimilating and retaining them in the
future. As the Company seeks to expand its worldwide support organization,
hiring of qualified technical personnel in foreign countries will be difficult
due to the limited number of qualified professionals. Failure to attract,
    
 
                                       11
<PAGE>
   
assimilate and retain key personnel would have a material adverse effect on the
Company's business, operating results and financial condition. In addition, the
Novell Agreement requires the Company to employ a minimum number of research and
development personnel. See "--Product Concentration; Dependence on Growth of
Market for Middleware; Novell Relationship" and "Business--Employees."
    
 
   
EXPANDING DISTRIBUTION CHANNELS AND RELIANCE ON THIRD PARTIES
    
 
   
    To date, the Company has sold its products principally through its direct
sales force, as well as through indirect sales channels, such as independent
software vendors ("ISVs"), hardware OEMs, systems integrators, independent
consultants and distributors. Of the Company's revenues in the fiscal year ended
January 31, 1997, approximately $52.2 million resulted from sales by the
Company's direct sales force, and approximately $9.4 million resulted from sales
through indirect channels. The Company's ability to achieve significant revenue
growth in the future will depend in large part on its success in expanding its
direct sales force and in further establishing and maintaining relationships
with distributors, OEMs and ISVs. In particular, a significant element of the
Company's strategy is to embed its technology in products offered by the
Company's ISV customers. The Company intends to seek distribution arrangements
with other ISVs to embed the Company's technology in their products and expects
that these arrangements will account for a significant portion of the Company's
revenues in future periods.
    
 
   
    Although the Company is currently investing, and plans to continue to
invest, significant resources to expand its direct sales force and to develop
relationships with distributors and ISVs, the Company has at times experienced
and continues to experience difficulty in recruiting qualified sales personnel
and in establishing necessary third-party relationships. There can be no
assurance that the Company will be able to successfully expand its direct sales
force or other distribution channels, secure license agreements with additional
ISVs on commercially reasonable terms or at all, or otherwise further develop
its relationships with distributors and ISVs, or that any such expansion or
additional license agreements would result in an increase in revenues. Although
the Company believes that its investments in the expansion of its direct sales
force and in the establishment of other distribution channels through third
parties ultimately will improve the Company's operating results, to the extent
that such investments are made and revenues do not correspondingly increase, the
Company's business, operating results and financial condition will be materially
and adversely affected. See "Business--Sales, Marketing and Services."
    
 
   
INTERNATIONAL OPERATIONS
    
 
   
    International revenues accounted for 11% and 40% of total revenues in the
fiscal years ended January 31, 1996 and 1997, respectively. Revenues from France
and the United Kingdom accounted for 13% and 10%, respectively, of the Company's
total revenues in the fiscal year ended January 31, 1997. The Company believes
that its success depends upon continued expansion of its international
operations. As of January 31, 1997, the Company had sales and service offices in
Brisbane, CapeTown, Espoo (Finland), Hong Kong, Johannesburg, London, Melbourne,
Munich, Paris, Sao Paulo, Seoul, Stockholm, Sydney, Toronto, Yokohama, Zaventem
(Belgium) and Zurich. At January 31, 1997, the Company also had 13 resellers in
11 locations outside the United States. The Company's international business
involves a number of risks, including lack of acceptance of localized products;
cultural differences in the conduct of business; longer accounts receivable
payment cycles; greater difficulty in accounts receivable collection;
seasonality due to the slow-down in European business activity during the summer
months; unexpected changes in regulatory requirements; royalties and withholding
taxes that restrict the repatriation of earnings; tariffs and other trade
barriers; difficulty hiring qualified personnel; economic and political
conditions in each country; management of an enterprise spread over various
countries; and the burden of complying with a wide variety of foreign laws. In
addition, the Company has acquired or otherwise established 13 foreign offices
since inception and is seeking to integrate each of these offices into the
Company's overall administrative and financial reporting structure, which is
anticipated to result in the hiring of additional personnel in many of these
international
    
 
                                       12
<PAGE>
   
offices. The Company's international sales are generated primarily through its
international sales subsidiaries, and most are currently denominated in local
currency, creating a risk of foreign currency translation gains and losses. To
the extent profit is generated or losses are incurred in foreign countries, the
Company's effective income tax rate may be materially and adversely affected. In
future periods, the Company may determine to increase the percentage of
international sales of its products at prices denominated in U.S. dollars. In
such event, fluctuations in currency exchange rates may render the price of the
Company's products unaffordable or uncompetitive. Such an event could have a
material adverse effect on the Company's business, financial condition and
results of operations. In some markets, localization of the Company's products
is essential to achieve market penetration. The Company may incur substantial
costs and experience delays in localizing its products, and there can be no
assurance that any localized product will generate significant revenues. There
can be no assurance that any of the factors described herein will not have a
material adverse effect on the Company's future international sales and,
consequently, its business, operating results and financial condition. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business--Sales, Marketing and Services" and Note 12 of Notes to
BEA Systems, Inc. Consolidated Financial Statements.
    
 
TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW PRODUCTS AND PRODUCT ENHANCEMENTS
 
    The market for the Company's products is highly fragmented, competitive with
alternative computing architectures, and characterized by continuing
technological development, evolving industry standards and changing customer
requirements. The introduction of products embodying new technologies, the
emergence of new industry standards or changes in customer requirements could
render the Company's existing products obsolete and unmarketable. As a result,
the Company's success depends upon its ability to enhance existing products,
respond to changing customer requirements, and develop and introduce in a timely
manner new products that keep pace with technological developments and emerging
industry standards. Customer requirements include, but are not limited to,
operability across distributed and changing heterogeneous hardware platforms,
operating systems, relational databases and networks. For example, although BEA
TUXEDO interoperates with applications on over 40 operating platforms, as
certain of the Company's customers start to utilize emerging platforms, it will
be necessary for the Company to further enhance its products to interoperate
with applications on these emerging platforms. There can be no assurance that
the Company's products will adequately address the changing needs of the
marketplace or that the Company will be successful in developing and marketing
enhancements to its existing products or new products incorporating new
technology on a timely basis. Failure to develop and introduce new products, or
enhancements to existing products, in a timely manner in response to changing
market conditions or customer requirements, will materially and adversely affect
the Company's business, operating results and financial condition.
 
    The Company's BEA Jolt product is designed to enable the extension of
enterprise-wide, mission-critical applications to Internet and intranet
environments. Although BEA Jolt has not accounted for a significant portion of
the Company's revenues to date, the Company intends to release enhanced versions
of BEA Jolt with greater functionality during the fiscal year ended January 31,
1998, and the Company's objective is to increase license revenues from the BEA
Jolt product, both in absolute dollars and as a percentage of the Company's
revenues in future periods, although there can be no assurance of such increase.
The success of BEA Jolt depends upon, among other things, the future growth of
the Internet for commercial transactions. There can be no assurance that
communication or commerce over the Internet will become widespread, or that the
Internet will prove to be a viable commercial marketplace. If BEA Jolt fails to
adequately address customer concerns regarding the use of the Internet for
commerce, or if the Internet otherwise does not prove to be a viable commercial
marketplace, the success of the BEA Jolt product will be materially and
adversely affected. In addition, the current version of BEA Jolt operates
through Java-based applets, and the Company anticipates that future versions of
BEA Jolt will similarly operate through Java. Accordingly, the success of BEA
Jolt depends upon the continued widespread demand for Java-enabled World Wide
Web browsers. See "Business--Products and --Research and Development."
 
                                       13
<PAGE>
SOFTWARE DEFECTS
 
    Software products as complex as those offered by the Company frequently
contain errors or defects, especially when first introduced or when new versions
or enhancements are released. Despite product testing, the Company's recently
introduced products or any products may contain defects or software errors and,
as a result, the Company may experience delayed or lost revenues during the
period required to correct any defects or errors. Any such defects or errors
could result in adverse customer reactions, negative publicity regarding the
Company and its products, harm to the Company's reputation, or loss of or delay
in market acceptance, or could require expensive product changes, any of which
could have a material adverse effect upon the Company's business, operating
results and financial condition. See "Business--Products and --Research and
Development."
 
PRODUCT LIABILITY
 
    The Company markets its products to customers for developing, building,
deploying and managing distributed mission-critical computer software
applications. The Company's license agreements with its customers typically
contain provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective as
a result of existing or future federal, state or local laws or ordinances or
unfavorable judicial decisions. Although the Company has not experienced any
product liability claims to date, the sale and support of its products by the
Company may entail the risk of such claims, which could be substantial in light
of the use of such products in mission-critical applications. A successful
product liability claim brought against the Company could have a material
adverse effect upon the Company's business, operating results and financial
condition.
 
DEPENDENCE ON PROPRIETARY TECHNOLOGY; RISK OF INFRINGEMENT
 
   
    The Company's success depends upon its proprietary technology. The Company
relies on a combination of copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
its proprietary rights. The Company presently has three issued patents and two
pending patent applications, as well as an exclusive license to one patent and
one pending patent application. Following the closing of the Digital
transaction, the Company will have an exclusive license to one additional U.S.
patent and two additional U.S. patent applications. No assurance can be given
that competitors will not successfully challenge the validity or scope of the
Company's patents and that such patents will provide a competitive advantage to
the Company. As part of its confidentiality procedures, the Company generally
enters into non-disclosure agreements with its employees, distributors and
corporate partners, and license agreements with respect to its software,
documentation and other proprietary information. Despite these precautions, it
may be possible for a third party to copy or otherwise obtain and use the
Company's products or technology without authorization, or to develop similar
technology independently. In particular, the Company has, in the past, provided
certain hardware OEMs with access to its source code, and any unauthorized
publication or proliferation of this source code could materially adversely
affect the Company's business, operating results and financial condition.
Policing unauthorized use of the Company's products is difficult and, although
the Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem.
Effective protection of intellectual property rights is unavailable or limited
in certain foreign countries. There can be no assurance that the Company's
protection of its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar technology, duplicate the
Company's products or design around any patents issued to the Company or other
intellectual property rights of the Company.
    
 
    The Company is not aware that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim such infringement by the Company with respect to current or
future products. The Company expects that software product developers will
increasingly be subject to such claims as the number of products and competitors
in the Company's industry segment grows and the functionality of products in the
industry segment overlaps. Any such
 
                                       14
<PAGE>
claims, with or without merit, could result in costly litigation that could
absorb significant management time, which could have a material adverse effect
on the Company's business, operating results and financial condition. Such
claims might require the Company to enter into royalty or license agreements.
Such royalty or license agreements, if required, may not be available on terms
acceptable to the Company or at all, which could have a material adverse effect
upon the Company's business, operating results and financial condition. See
"Business--Intellectual Property."
 
NO PRIOR PUBLIC MARKET; DETERMINATION OF PUBLIC OFFERING PRICE; POSSIBLE
  VOLATILITY OF STOCK PRICE
 
   
    Prior to the offering, there has been no public market for shares of the
Common Stock, and there can be no assurance that an active public trading market
will develop following completion of the offering or, if developed, that such
market will be sustained. The initial public offering price of the shares of
Common Stock will be determined by negotiation between the Company and
representatives of the Underwriters and will not necessarily reflect the market
price of the Common Stock following this offering. See "Underwriting" for a
discussion of the factors to be considered in determining the initial public
offering price.
    
 
   
    The market price for the Common Stock following the offering will be
affected by a number of factors, including the announcement of new products or
product enhancements by the Company or its competitors, quarterly variations in
the Company's or its competitors' results of operations, changes in earnings
estimates or recommendations by securities analysts, developments in the
Company's industry, general market conditions and other factors, including
factors unrelated to the operating performance of the Company or its
competitors. In addition, stock prices for many companies in the technology and
emerging growth sectors have experienced wide fluctuations that have often been
unrelated to the operating performance of such companies. Such factors and
fluctuations, as well as general economic, political and market conditions, such
as recessions, may materially adversely affect the market price of the Company's
Common Stock.
    
 
   
POTENTIAL EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE ON MARKET PRICE OF THE
  COMMON STOCK
    
 
   
    Sales of a substantial number of shares of Common Stock after the offering
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through the sale of equity securities. Upon
completion of the offering, the Company will have 53,640,944 shares of Common
Stock including 29,406,982 shares of Common Stock issuable upon conversion of
the Class B Common Stock outstanding based on shares outstanding as of February
28, 1997. Of these shares, the 5,000,000 shares sold in the offering will be
freely transferable without restriction under the Securities Act, unless they
are held by "affiliates" of the Company as that term is used under the
Securities Act and the Regulations promulgated thereunder.
    
 
   
    The remaining 48,640,944 outstanding shares were sold by the Company in
reliance on exemptions from the registration requirements of the Securities Act
and are restricted securities within the meaning of Rule 144 under the
Securities Act. None of these shares will be eligible for sale in the public
market at the effective date of the Registration Statement of which this
Prospectus is a part (the "Effective Date"). Beginning 180 days after the date
of this Prospectus, approximately 47,440,366 additional shares will become
eligible for sale subject to the provisions of Rule 144 or Rule 701 upon the
expiration of agreements not to sell such shares entered into with Goldman,
Sachs & Co. or the Company. Beginning 180 days after the date of this
Prospectus, 2,010,514 additional shares subject to vested options as of the date
of this Prospectus will be available for sale subject to compliance with Rule
701 and upon the expiration of agreements not to sell such shares entered into
with Goldman, Sachs & Co. or the Company. In addition, 428,571 additional shares
(assuming the consummation of the Digital agreement and an initial offering
price of $7.00 per share) subject to outstanding warrants will be available for
sale 180 days after the date of this prospectus. The remainder of the shares
will be eligible for sale from time to time thereafter upon expiration of their
respective one-year holding periods, subject in each case to the restrictions on
such sales by affiliates of the Company. Any shares subject to lock-up
agreements may be earlier released at any time without notice by Goldman, Sachs
& Co.
    
 
                                       15
<PAGE>
   
    As soon as practicable after the Effective Date, the Company intends to file
a registration statement on Form S-8 under the Securities Act to register shares
of Common Stock reserved for issuance under the 1995 Flexible Stock Incentive
Plan, the 1997 Stock Incentive Plan and the 1997 Employee Stock Purchase Plan,
thus permitting the resale of such shares by non-affiliates in the public market
without restriction under the Securities Act unless subject to lock-up
agreements. Such registration statement will become effective immediately upon
filing.
    
 
   
    Prior to the offering, there has been no public market for the Common Stock
of the Company, and any sale of substantial amounts in the open market may
adversely affect the market price of the Common Stock offered hereby. See
"Shares Eligible for Future Sale."
    
 
   
ANTITAKEOVER EFFECTS OF CERTIFICATE OF INCORPORATION, BYLAWS AND DELAWARE LAW
    
 
   
    The Company's Board of Directors has the authority to issue up to 5,000,000
shares of Preferred Stock and to determine the price, rights, preferences,
privileges and restrictions, including voting and conversion rights, of those
shares without any further vote or action by the stockholders. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any Preferred Stock that may be issued in the
future. In addition, the Board of Directors has the authority to issue
undesignated Preferred Stock and, subject to certain limitations, to determine
the rights, preferences, privileges and restrictions, including voting rights,
of such shares without any further vote or action by the stockholders. The
issuance of Preferred Stock could have the effect of making it more difficult
for a third party to acquire a majority of the outstanding voting stock of the
Company. In addition, the Company is subject to the antitakeover provisions of
Section 203 of the Delaware General Corporation Law, which will prohibit the
Company from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless the business
combination is approved in a prescribed manner. The application of Section 203
also could have the effect of delaying or preventing a change of control of the
Company. Further, certain provisions of the Company's Certificate of
Incorporation and Bylaws and of Delaware law could delay or make more difficult
a merger, tender offer or proxy contest involving the Company, which could
adversely affect the market price of the Company's Common Stock. See
"Description of Capital Stock--Preferred Stock and --Antitakeover Effects of
Provisions of the Certificate of Incorporation, Bylaws and Delaware Law."
    
 
CONTROL BY MANAGEMENT AND CURRENT STOCKHOLDERS
 
   
    After the offering, the Company's officers and directors, and their
affiliates, in the aggregate, will have voting control over approximately 74.0%
of the Company's voting Common Stock. In particular, Warburg will have voting
control over approximately 49.0% of the Company's voting Common Stock and will
beneficially own approximately 77.0% of the Company's Common Stock (which
includes the non-voting Class B Common Stock to be owned by Warburg after the
offering). As a result, these stockholders will be able to control all matters
requiring stockholder approval, including the election of directors and approval
of significant corporate transactions. The voting power of Warburg and the
Company's officers and directors under certain circumstances could have the
effect of delaying or preventing a change in control of the Company. See
"Principal Stockholders" and "Description of Capital Stock."
    
 
DILUTION
 
   
    The initial public offering price will be substantially higher than the book
value per share of Common Stock. Investors purchasing shares of Common Stock in
this offering will experience immediate and substantial dilution in net tangible
book value of $7.77 per share. The Company has issued options at prices
significantly below the public offering price. To the extent outstanding options
to purchase shares of Common Stock are exercised, there will be further dilution
in net tangible book value. See "Dilution."
    
 
                                       16
<PAGE>
                                USE OF PROCEEDS
 
   
    The net proceeds to the Company from the sale of the shares of Common Stock
being offered hereby are estimated to be approximately $30,450,000 ($35,332,500
if the Underwriters' over-allotment options are exercised in full).
    
 
   
    The net proceeds of the offering are expected to be used for repayment of
amounts borrowed by the Company under its revolving credit line and for the
payment of certain obligations incurred in connection with the Acquisitions.
Depending upon the level of the Company's borrowings thereunder, up to $10
million will be used to repay the outstanding borrowings under the revolving
credit line. As of February 28, 1997, the Company had outstanding borrowings of
approximately $8.3 million under the revolving credit line. Approximately $4.6
million will be used to repay the entire amount due at the offering under an 8%
note issued by the Company to the founders of an operating subsidiary acquired
by the Company in September 1995. Assuming that the Digital transaction closes,
$5 million will be used to make payments to Digital, $3 million of which will be
due on June 20, 1997 and $2 million of which will be due on the earlier of June
20, 1997 or 10 days after the purchase by Digital of $2 million worth of Common
Stock offered hereby. The $12.6 million balance of the net proceeds is expected
to be used to make payments toward the $32 million due to Novell in calendar
year 1997. Any remaining proceeds will be added to working capital and used for
general corporate purposes. The Company may also use a portion of the net
proceeds to fund acquisitions of complementary businesses, products or
technologies. Pending such uses, the net proceeds of the offering will be
invested in investment grade, interest-bearing instruments.
    
 
   
    The Company believes the net proceeds of the offering together with its
current cash balances, borrowings available under its lines of credit and cash
flow from operations will be sufficient to meet its working capital
requirements, including the payment obligations related to the Acquisitions
through at least January 31, 1998. Thereafter, the Company expects that it will
require substantial additional capital to meet its $33 million and $12 million
payment obligations to Novell in 1998 and January 1999, respectively, and its
aggregate payment obligations to Digital of up to $17 million through February
2000, including an $11 million payment due on or before February 1, 2000. See
"Risk Factors--Past and Future Acquisitions, --Use of Proceeds to Pay Certain
Outstanding Indebtedness and Acquisition Obligations and --Substantial Future
Capital Needs" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations--Liquidity and Capital Resources."
    
 
                                DIVIDEND POLICY
 
   
    The Company has never declared or paid any cash dividends on its capital
stock. The Company currently intends to retain earnings, if any, to support the
development of its business and does not anticipate paying cash dividends for
the foreseeable future. Payment of future dividends, if any, will be at the
discretion of the Company's Board of Directors after taking into account various
factors, including the Company's financial condition, operating results and
current and anticipated cash needs. In addition, an existing revolving line of
credit agreement prohibits the Company from paying cash dividends without the
lender's consent. See Note 6 of Notes to BEA Systems, Inc. Consolidated
Financial Statements.
    
 
                                       17
<PAGE>
                                 CAPITALIZATION
 
   
    The following table sets forth the capitalization of the Company (i) as of
January 31, 1997, (ii) on a pro forma basis to give effect to the conversion
into Common Stock or Class B Common Stock upon completion of the offering of all
outstanding Preferred Stock and a convertible loan in the principal amount of
$1,000,000 at January 31, 1997, based on an assumed initial public offering
price of $7.00 and the filings of the Company's Amended and Restated Certificate
of Incorporation to authorize 35,000,000 shares of Class B Common Stock and to
adjust the authorized shares of Preferred Stock prior to the Closing of the
offering and (iii) as further adjusted to give effect to the sale by the Company
of 5,000,000 shares of Common Stock offered by the Company hereby at an assumed
initial public offering price of $7.00 per share and the receipt of estimated
net proceeds therefrom. This table should be read in conjunction with the BEA
Systems, Inc. Consolidated Financial Statements and notes thereto and "Selected
Consolidated Financial Data" included elsewhere in this Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                                     JANUARY 31, 1997
                                                                         -----------------------------------------
                                                                           ACTUAL       PRO FORMA     AS ADJUSTED
                                                                         -----------  -------------  -------------
                                                                                      (IN THOUSANDS)
<S>                                                                      <C>          <C>            <C>
Notes Payable and Capital Lease Obligations(1).........................  $    49,540  $      48,540  $      43,951
Series B Redeemable Convertible Preferred Stock, $0.001 par value;
  20,000,000 shares authorized, 19,847,800 shares issued and
  outstanding, actual; none authorized, issued and outstanding, pro
  forma and as adjusted................................................       20,780             --             --
Stockholders' Equity:
  Preferred Stock, $.001 par value; none authorized, issued and
    outstanding, actual; 5,000,000 authorized, none issued and
    outstanding, pro forma and as adjusted.............................           --             --             --
  Series A Preferred Stock, $.001 par value; 20,000,000 shares
    authorized, 17,166,000 shares issued and outstanding, actual; none
    authorized, issued and outstanding, pro forma and as adjusted......           17             --             --
  Common Stock, $.001 par value; 80,000,000 shares authorized,
    10,747,787 shares issued and outstanding, actual; 80,000,000 shares
    authorized, 19,018,381 shares issued and outstanding pro forma;
    80,000,000 shares authorized, 24,018,381 shares issued and
    outstanding, as adjusted(2)........................................           11             19             24
  Class B Common Stock: $.001 par value; none authorized and
    outstanding actual; 31,000,000 authorized, 29,406,982 issued and
    outstanding pro forma and as adjusted(3)...........................           --             29             29
Additional Paid-in Capital.............................................       32,335         54,095         84,540
Notes Receivable from Stockholders.....................................         (544)          (544)          (544)
Cumulative Translation Adjustment......................................           74             74             74
Deferred Compensation related to Stock Options.........................         (845)          (845)          (845)
Accumulated Deficit....................................................     (107,337)      (107,337)      (107,337)
                                                                         -----------  -------------  -------------
  Total Stockholders' Equity (Deficit).................................      (76,289)       (54,509)       (24,059)
                                                                         -----------  -------------  -------------
    Total Capitalization...............................................  $    (5,969) $      (5,969) $      19,892
                                                                         -----------  -------------  -------------
                                                                         -----------  -------------  -------------
</TABLE>
    
 
- --------------
   
(1)  Gives effect to the conversion of the Warburg convertible loan into 153,610
    shares of Common Stock or Class B Common Stock (pro forma), and the
    repayment of $4,589,000 of notes payable (plus accrued interest) to the
    founders of IMC with the proceeds of the offering (as adjusted). See
    "Certain Transactions--Warburg Line of credit."
    
 
   
(2) Excludes (i) 6,681,288 shares issuable upon exercise of options outstanding
    as of January 31, 1997 having a weighted average exercise price of $0.996
    per share under the Company's 1995 Flexible Stock Incentive Plan and (ii)
    6,350,000 additional shares authorized for issuance under the Stock Plans.
    See "Management--Stock Plans and --Executive Compensation" and Note 11 of
    Notes to BEA Systems, Inc. Consolidated Financial Statements.
    
 
   
(3) See "Description of Capital Stock" for a description of the terms of the
    Class B Common Stock.
    
 
                                       18
<PAGE>
                                    DILUTION
 
   
    At January 31, 1997, the Company's pro forma net tangible book value was
$(71,735,000) or approximately $(1.48) per share. Pro forma net tangible book
value per share represents the amount of the Company's total assets less net
intangible assets (less total liabilities) divided by 48,425,363 shares of
Common Stock (all computed on a pro forma basis to give effect to the conversion
upon completion of the offering of all shares of Preferred Stock and the
convertible loan based on an assumed initial public offering price of $7.00 per
share) outstanding at January 31, 1997, and assumes the conversion of all Class
B Common Stock into Common Stock. Net tangible book value dilution per share
represents the difference between the amount per share paid by purchasers of
shares of Common Stock in the offering made hereby and the pro forma net
tangible book value per share of Common Stock immediately after completion of
the offering. After giving effect to the sale by the Company of 5,000,000 shares
of Common Stock offered by the Company hereby at an assumed initial public
offering price of $7.00 per share, and the application of the estimated net
proceeds therefrom, the pro forma net tangible book value of the Company as of
January 31, 1997 would have been $(41,285,000) or $(0.77) per share. This
represents an immediate increase in net tangible book value of $0.71 per share
to existing stockholders and an immediate dilution in net tangible book value of
$7.77 per share to the purchasers of Common Stock in the offering, as
illustrated in the following table:
    
 
   
<TABLE>
<S>                                                        <C>          <C>
Assumed initial public offering price per share..........                $    7.00
  Pro forma net tangible book value per share as of
    January 31, 1997.....................................   $   (1.48)
  Increase attributable to new investors.................         .71
                                                           -----------
Pro forma net tangible book value per share after the
 offering................................................                $   (0.77)
                                                                        -----------
Dilution per share to new investors......................                $    7.77
                                                                        -----------
                                                                        -----------
</TABLE>
    
 
   
    The following table sets forth, on a pro forma basis as of January 31, 1997,
the differences between the existing stockholders and the purchasers of shares
in the offering (at an assumed initial public offering price of $7.00 per share
and before deducting the estimated underwriting discount and offering expenses)
with respect to the number of shares purchased from the Company, the total
consideration paid and the average price per share paid:
    
 
   
<TABLE>
<CAPTION>
                                          SHARES PURCHASED           TOTAL CONSIDERATION
                                     --------------------------  ---------------------------   AVERAGE PRICE
                                        NUMBER        PERCENT        AMOUNT        PERCENT       PER SHARE
                                     -------------  -----------  --------------  -----------  ---------------
<S>                                  <C>            <C>          <C>             <C>          <C>
Existing stockholders..............     48,425,363        90.6%  $   52,238,000        59.9%     $    1.08
New investors(1)...................      5,000,000         9.4%      35,000,000        40.1%          7.00
                                     -------------       -----   --------------       -----
  Total............................     53,425,363       100.0%  $   87,238,000       100.0%
                                     -------------       -----   --------------       -----
                                     -------------       -----   --------------       -----
</TABLE>
    
 
- --------------
 
   
(1) The above computations assume no exercise of options after January 31, 1997.
    Excludes (i) 6,681,288 shares issuable upon exercise of options outstanding
    as of January 31, 1997 having a weighted average exercise price of $0.996
    per share under the Company's 1995 Flexible Stock Incentive Plan and (ii)
    6,350,000 additional shares authorized for issuance under the Stock Plans.
    To the extent that outstanding options are exercised, there will be further
    dilution to new investors. See "Capitalization," "Management--Stock Plans
    and --Executive Compensation" and Note 11 of Notes to BEA Systems, Inc.
    Consolidated Financial Statements.
    
 
                                       19
<PAGE>
                      SELECTED CONSOLIDATED FINANCIAL DATA
 
   
    The following selected consolidated financial data of the Company should be
read in conjunction with the consolidated financial statements and the notes
thereto and Management's Discussion and Analysis of Financial Condition and
Results of Operations included elsewhere herein. The consolidated statements of
operations data of the Company for the years ended January 31, 1996 and 1997 and
the consolidated balance sheet data of the Company at January 31, 1996 and 1997
are derived from, and qualified by reference to, the BEA Systems, Inc.
Consolidated Financial Statements, which have been audited by Ernst & Young LLP,
independent auditors, included elsewhere in this Prospectus.
    
 
   
<TABLE>
<CAPTION>
                                                                                          YEAR ENDED JANUARY 31,
                                                                                        --------------------------
                                                                                          1996(1)         1997
                                                                                        ------------  ------------
                                                                                        (IN THOUSANDS, EXCEPT PER
                                                                                               SHARE DATA)
<S>                                                                                     <C>           <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
    License Revenues..................................................................   $    3,569    $   46,839
    Service Revenues..................................................................        1,564        14,759
                                                                                        ------------  ------------
      Total Revenues(2)...............................................................        5,133        61,598
  Total Cost of Revenues(3)...........................................................        2,704        18,607
                                                                                        ------------  ------------
  Gross Margin........................................................................        2,429        42,991
 
  Operating Expenses:
    Research and Development..........................................................        3,244        18,183
    Sales and Marketing...............................................................        2,572        30,970
    General and Administrative........................................................        3,058        12,732
    Write-Off of In-Process Research and Development..................................       11,194        62,248
                                                                                        ------------  ------------
      Total Operating Expenses........................................................       20,068       124,133
                                                                                        ------------  ------------
 
  Income (Loss) from Operations.......................................................      (17,639)      (81,142)
  Other Income (Expense)..............................................................           48             4
  Interest Expense....................................................................          (89)       (6,727)
                                                                                        ------------  ------------
  Income (Loss) before Income Taxes...................................................      (17,680)      (87,865)
  Provision for Income Taxes..........................................................           60           800
                                                                                        ------------  ------------
  Net Income (Loss)...................................................................   $  (17,740)   $  (88,665)
                                                                                        ------------  ------------
                                                                                        ------------  ------------
  Pro Forma Net Income (Loss) Per Share(4)............................................                 $    (1.73)
                                                                                                      ------------
                                                                                                      ------------
  Shares Used in Computing Pro Forma Net Income (Loss) Per Share(4)...................                     51,162
                                                                                                      ------------
                                                                                                      ------------
 
CONSOLIDATED BALANCE SHEET DATA (AT PERIOD END):
  Cash and Cash Equivalents...........................................................   $    4,549    $    3,283
  Working Capital (Deficit)...........................................................        2,510       (32,798)
  Total Assets........................................................................       18,953        57,973
  Long-Term Obligations (Less Current Portion)........................................        4,287        49,540
  Stockholders' Equity (Deficit)......................................................        2,038       (76,289)
</TABLE>
    
 
- ------------------
 
   
(1) The consolidated statement of operations data for the year ended January 31,
    1996 includes results of operations from incorporation (January 20, 1995)
    through January 31, 1995.
    
 
   
(2) If the acquisitions of IMC, ITI, TUXEDO and USL France had occurred on
    February 1, 1995, the pro forma revenues would have been $33.6 million and
    $62.5 million for the years ended January 31, 1996 and 1997, respectively.
    See "Management's Discussion and Analysis of Financial Condition and Results
    of Operations."
    
 
   
(3) Includes expenses attributable to amortization of intangible assets
    resulting from acquisitions in the amounts of $1.0 million and $8.6 million,
    for the years ended January 31, 1996 and 1997, respectively.
    
 
   
(4) See Note 1 of Notes to BEA Systems, Inc. Consolidated Financial Statements
    for an explanation of the method used to determine the number of shares used
    in computing pro forma net income (loss) per share.
    
 
                                       20
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS
 
   
    THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS
PROSPECTUS. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED AND SECTION 21E
OF THE EXCHANGE ACT OF 1934, AS AMENDED, INCLUDING STATEMENTS REGARDING (I) THE
CLOSING OF THE DIGITAL TRANSACTION AND THE EXPECTED IMPACT OF THE DIGITAL
TRANSACTION ON THE COMPANY'S OPERATING RESULTS AND FINANCIAL CONDITION; (II) THE
EXPECTED INCREASES IN LICENSE AND SERVICE REVENUES IN FUTURE PERIODS; (III) THE
PLANNED EXPANSION OF THE COMPANY'S SALES, MARKETING AND RESEARCH AND DEVELOPMENT
ORGANIZATIONS; AND (IV) THE SUFFICIENCY OF THE COMPANY'S CURRENT CASH BALANCES,
BORROWINGS AVAILABLE UNDER ITS LINES OF CREDIT AND CASH FLOW FROM OPERATIONS TO
MEET ITS WORKING CAPITAL REQUIREMENTS. THESE STATEMENTS INVOLVE RISKS AND
UNCERTAINTIES AND ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN
THE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN OF THE FACTORS, INCLUDING
BUT NOT LIMITED TO THOSE DISCUSSED IN "RISK FACTORS" AND ELSEWHERE IN THIS
PROSPECTUS.
    
 
COMPANY BACKGROUND
 
    The Company was founded in January 1995 to address the growing need of large
organizations to extend mission-critical applications beyond legacy mainframe
systems to distributed computing environments. To address this problem, the
Company evaluated the growing market for middleware solutions in an effort to
identify a robust, scalable software product that would enable interoperable,
seamless processing of applications between the mainframe and distributed
environments within an organization. The Company identified the TUXEDO product,
all rights to which were owned by Novell, as a middleware infrastructure
solution capable of meeting this need and serving as a standard for extending
the functionality of mainframes to distributed computing environments. To
implement its strategy, the Company first acquired two leading United States
resellers of TUXEDO and then acquired a worldwide exclusive license to TUXEDO
from Novell. Through these and a number of subsequent acquisitions, the Company
has built a worldwide organization that now owns or controls substantially all
of the development, distribution and marketing rights to TUXEDO as well as
several other products that comprise the BEA Enterprise Transaction Framework.
 
   
    From January 1995 to September 1995, the Company pursued the acquisition of
two leading resellers of Novell's TUXEDO product, which culminated in the
acquisition of Information Management Company ("IMC") in September 1995 and
Independence Technologies, Inc. ("ITI") in November 1995. Both IMC and ITI were
authorized resellers of Novell's TUXEDO product line and had established sales
and support organizations that enabled BEA to provide direct sales and support
throughout all of North America. In September 1995, the Company also acquired
the TP Blue product from VI Systems, Inc. TP Blue complements BEA TUXEDO in that
it enables the integration of legacy mainframe applications into distributed
computing environments.
    
 
    In February 1996, BEA acquired exclusive worldwide rights to TUXEDO from
Novell. Novell had originally obtained TUXEDO through its acquisition in 1993 of
UNIX Systems Laboratories from AT&T, which originally developed TUXEDO in its
Bell Labs division. Under the terms of the Novell Agreement, the Company
obtained worldwide exclusive rights to TUXEDO in exchange for a series of fixed
payments totaling $90 million over the original three-year term of the agreement
and was granted an option, exercisable in January 1999, to acquire perpetual
rights to the TUXEDO product line. Under the terms of the Novell Agreement,
Novell retains the right to market TUXEDO in combination with its Netware
product. The Company is obligated to make payments of $32 million and $33
million in calendar years 1997 and 1998, respectively, and will be required to
pay an additional $12 million on exercise of its January 1999 option. For
financial reporting purposes, the purchase price allocation to assets acquired
in the acquisition of TUXEDO has been determined based on the assumed exercise
by the Company of
 
                                       21
<PAGE>
   
its option in January 1999 to acquire the perpetual worldwide rights to TUXEDO.
As part of the Company's original licensing of TUXEDO, Novell transferred to the
Company approximately 53 employees engaged in the development, marketing and
support of the TUXEDO product line, as well as all of Novell's rights and
obligations under its agreements with worldwide distributors and resellers for
TUXEDO. At January 31, 1997, the Company had a development staff of 105, which
included the original four architects, as well as many of the original
developers, of TUXEDO. See "Risk Factors--Product Concentration; Dependence on
Growth of Market for Middleware; Novell Relationship."
    
 
    As part of its strategy to rapidly build an international sales and support
organization, BEA further acquired, between May 1996 and December 1996, a number
of sales and support organizations located in France, South Africa, Finland and
Australia. See "Risk Factors--Limited Operating History; No Assurance of
Profitability and --Past and Future Acquisitions."
 
   
    On January 31, 1997, the Company entered into an agreement with Digital to
acquire exclusive worldwide rights to MessageQ, ObjectBroker and other related
products from Digital for an aggregate consideration of $22 million. The Company
currently anticipates that the Digital transaction will close on or about March
26, 1997. Of the aggregate consideration for the products, $5 million will be
payable in cash ($3 million of which will be due on June 20, 1997 and $2 million
of which will be due on June 20, 1997 or 10 days after the sale of the Common
Stock offered hereby), and $17 million will be payable by delivery of a $17
million non-interest bearing convertible promissory note. The promissory note
provides for installments of $2 million, $4 million and $11 million payable on
or before February 1, 1998, 1999 and 2000, respectively, and may be converted
into shares of the Company's Common Stock at the option of Digital at a
conversion price of 1.5 times, 1.8 times and 2.5 times the initial public
offering price, respectively; provided, however, that only $5 million of such
$11 million is convertible. In addition, the Company has granted Digital
warrants to purchase $3 million worth of Common Stock at a price equal to the
initial public offering price exercisable for the period beginning 180 days
after the date of this offering and expiring one year thereafter. As part of the
Digital transaction, the Company expects to add a total of approximately 90
employees and contractors who were primarily responsible for development of the
acquired products at Digital and who will become BEA employees or contractors
following the closing. The closing of the Digital transaction is subject to
certain conditions, and no assurance can be made that such transaction will be
consummated and that the various Digital products will be acquired by the
Company.
    
 
OVERVIEW
 
   
    The Company's total revenues consist of license revenues and service
revenues. License revenues are derived primarily from sales of BEA TUXEDO and
accounted for 76% of total revenues in the fiscal year ended January 31, 1997.
Service revenues are derived primarily from a full range of services
complementing the Company's products, including software maintenance and
support, training and consulting projects, and accounted for 24% of total
revenues in the fiscal year ended January 31, 1997. Sales of BEA TUXEDO and
related services are expected to continue to account for a substantial majority
of the Company's revenues for the forseeable future. See "Risk Factors--Product
Concentration; Dependence on Growth of Market for Middleware; Novell
Relationship."
    
 
    Because the Company generally ships software products within a short period
after receipt of an order, it will not at any given time have a material backlog
of unfilled orders, and revenues in any quarter are substantially dependent on
orders booked and shipped in that quarter. In addition, the Company historically
has recognized, and expects to continue to recognize, a significant portion of
license revenues in the last month of each fiscal quarter. The Company
anticipates that it will derive a substantial portion of its revenues from
increasingly large orders, as customers deploy BEA products throughout their
organizations. Any inability of the Company to generate large orders, or any
delay or loss of large orders in a particular quarter, will materially adversely
affect the Company's revenues and, more significantly on a percentage basis, its
net income or loss in that quarter. See "Risk Factors--Potential Fluctuations in
Quarterly Operating Results."
 
                                       22
<PAGE>
    Historically, the Company's revenues have been generated primarily through
its direct sales force. The Company has also developed strategic relationships
with a number of organizations, including hardware manufacturers, packaged
application software developers, systems integrators and independent
consultants, independent software tool vendors and distributors. For their sales
and marketing efforts, these organizations are typically granted a discount from
the Company's standard list price or are paid a commission on sales. Revenues
and operating margins may fluctuate in any period due to the mix of license
revenues derived from sales for which a discount is granted or for which
commissions are paid. See "Risk Factors--Expanding Distribution Channel and
Reliance on Third Parties."
 
    The Company recognizes license revenues in accordance with American
Institute of Certified Public Accountants Statement of Position 91-1, SOFTWARE
REVENUE RECOGNITION. Revenues from software license agreements are recognized at
the time of product shipment, provided there are no vendor obligations remaining
to be fulfilled and collectibility is probable. Typically, the Company's
software licenses do not include significant ongoing vendor obligations.
Therefore, the Company generally recognizes all revenues from software licenses
in the period in which the product is shipped.
 
   
    Service revenues from customer maintenance fees for ongoing customer support
and product updates are recognized ratably over the maintenance term, which is
typically twelve months. Payments for maintenance fees are generally received in
advance and recognized ratably. Service revenues from training and consulting
are recognized when the services are performed. Revenues from development
agreements are recognized upon achievement of contractual milestones or on a
percentage of completion basis.
    
 
CONSOLIDATED RESULTS OF OPERATIONS
 
   
    The following table sets forth, as a percentage of total revenues,
historical and pro forma consolidated statements of operations for the periods
indicated:
    
 
   
<TABLE>
<CAPTION>
                                     YEAR ENDED    YEAR ENDED
                                     JANUARY 31,   JANUARY 31,
                                        1996          1997
                                     -----------   -----------
<S>                                  <C>           <C>
Revenues:
  License Revenues.................       70%          76%
  Service Revenues.................       30           24
                                         ---          ---
    Total Revenues.................      100          100
Total Cost of Revenues(1)..........       53           30
                                         ---          ---
Gross Margin.......................       47           70
Operating Expenses:
  Research and Development.........       63           30
  Sales and Marketing..............       50           50
  General and Administrative.......       60           21
  Write-Off of In-Process Research
    and Development................      218          101
                                         ---          ---
    Total Operating Expenses.......      391          202
                                         ---          ---
Income (Loss) from Operations......     (344)        (132)
Other Income (Expense).............        1           --
Interest Expense...................       (2)         (11)
                                         ---          ---
Income (Loss) before Income
  Taxes............................     (345)        (143)
Provision for Income Taxes.........        1            1
                                         ---          ---
Net Income (Loss)..................     (346)%       (144)%
                                         ---          ---
                                         ---          ---
</TABLE>
    
 
- --------------
 
   
(1) Includes amortization of intangibles of 20% and 14% of total revenues,
    respectively, as a result of the Acquisitions.
    
 
                                       23
<PAGE>
HISTORICAL CONSOLIDATED RESULTS OF OPERATIONS
 
   
FISCAL YEARS ENDED JANUARY 31, 1996 AND 1997
    
 
  REVENUES
 
   
    The Company's revenues are derived primarily from fees for software licenses
and to a lesser extent from services. The Company's revenues were $5.1 million
and $61.6 million for the fiscal years ended January 31, 1996 and 1997,
respectively.
    
 
   
    If the acquisitions of IMC, ITI, TUXEDO and USL Finance, S.A. ("USL
France"), which represent the significant acquisitions made by the Company, had
occurred on February 1, 1995, the Company's pro forma revenues would be
approximately $33.6 million and $62.5 million for the fiscal years ended January
31, 1996 and 1997, respectively. Such pro forma revenues are derived by
combining the historical revenues of IMC, ITI, TUXEDO and USL France and
eliminating any revenues on transactions between the entities prior to their
acquisition by the Company. Pro forma revenues for the fiscal year ended January
31, 1996 give effect to historical TUXEDO revenues generated by Novell totaling
approximately $20.4 million. As the Company acquired TUXEDO from Novell at the
beginning of its fiscal year 1997, no corresponding revenue of Novell related to
TUXEDO is included in fiscal 1997 pro forma revenue. The increase in pro forma
revenue was due primarily to increased market acceptance of BEA TUXEDO after its
acquisition by the Company, as well as to the increase in consulting, training
and maintenance fees associated with the increased license revenues.
    
 
   
    International revenues, which the Company defines as revenues from sales to
customers outside the United States, accounted for 11% and 40% of total revenues
in the fiscal years ended January 31, 1996 and 1997, respectively. Pro forma
international revenues accounted for 34% and 41% of total revenues in the fiscal
years ended January 31, 1996 and 1997, respectively. Pro forma international
revenues for the year ended January 31, 1996 include approximately $9.2 million
of international historical TUXEDO revenues generated by Novell, which comprised
45% of TUXEDO revenues generated by Novell. Approximately 73% of international
historical TUXEDO revenues generated by Novell related to the European
marketplace. See "Risk Factors--International Operations."
    
 
   
    LICENSE REVENUES.  License revenues were $3.6 million and $46.8 million for
the fiscal years ended January 31, 1996 and 1997, respectively, representing 70%
and 76% of total revenues in the respective periods. The increase in dollar
amount was primarily due to the Company's inclusion of the results of operations
of IMC and ITI for a full year, acquisitions in the fiscal year ended January
31, 1997 of TUXEDO, USL France and Client Server Technologies OY ("CST"), and
market acceptance of BEA TUXEDO and related products.
    
 
   
    SERVICE REVENUES.  Service revenues were $1.6 million and $14.8 million for
the fiscal years ended January 31, 1996 and 1997, respectively, representing 30%
and 24% of total revenues in the respective periods. The increase in dollar
amount was primarily due to the Company's inclusion of IMC and ITI for a full
year of operations, and its subsequent acquisitions, as well as to the increase
in consulting, training and maintenance fees associated with the increased sales
of the Company's software licenses. The Company expects that service revenues
will increase as a percentage of total revenues in future periods, as the
Company continues to leverage its existing customer base by providing additional
services to assist customers in enhancing their uses of the Company's products.
    
 
  COST OF REVENUES
 
    Cost of revenues is comprised of cost of licenses and cost of services.
 
   
    COST OF LICENSES.  Cost of licenses consists primarily of amortization of
intangible assets related to acquisitions and license fees and royalties paid to
third party software providers as well as product media, product duplication and
shipping. Cost of licenses totaled $1.9 million and $10.3 million for the
    
 
                                       24
<PAGE>
   
fiscal years ended January 31, 1996 and 1997, respectively, representing 54% and
22% of license revenues, respectively. The increase in absolute dollars was due
primarily to the Company's acquisitions and the amortization of intangibles
related to those acquisitions. The decrease as a percentage of revenues was due
primarily to the substantial increase in license revenues during the period.
Amortization of intangible assets resulted from the acquisition of IMC and ITI
in the fiscal year ended January 31, 1996, as well as to the acquisitions of
TUXEDO, USL France and CST in the fiscal year ended January 31, 1997.
Amortization of intangible assets totaled $1.0 million and $8.6 million in the
fiscal years ended January 31, 1996 and 1997, respectively. In the future,
amortization of intangible assets acquired through January 31, 1997 are expected
to total $9.9 million for the fiscal year ended January 31, 1998, $5.2 million
for the fiscal year ended January 31, 1999 and $1.4 million for the remaining
balance of intangible assets through the fiscal year ended January 31, 2002. In
addition, the pending acquisition of MessageQ and ObjectBroker from DEC is
estimated to add approximately $1.6 million to $2.4 million per year in
amortization of intangible assets in the fiscal years ending January 31, 1998
and 1999. To the extent future events result in the impairment of any
capitalized intangible assets, amortization expenses may occur sooner than the
Company expects. See "Risk Factors--Limited Operating History; No Assurance of
Profitability."
    
 
   
    COST OF SERVICES.  Cost of services consists primarily of personnel-related
costs incurred in providing consulting services, training and maintenance to
customers. Cost of services were $775,000 and $8.3 million for the fiscal years
ended January 31, 1996 and 1997, respectively, representing 50% and 56% of total
service revenues for each period, respectively. The increase in absolute dollars
was due primarily to the Company's acquisitions and increased operating activity
resulting, in part, from such acquisitions. The increase in costs as a
percentage of related service revenues for the fiscal year ended January 31,
1997 over the same period in 1996 is the result of the hiring of additional
consulting and support personnel in response to an anticipated increase in the
number of customers. The Company has also invested substantial resources in a
worldwide 7x24x365 Customer Support organization to provide a high level of
maintenance service to the Company's customers. The Company expects service
margins to improve to the extent service revenues continue to increase.
    
 
  OPERATING EXPENSES
 
   
    SALES AND MARKETING.  Sales and marketing expenses include salaries,
commissions, advertising, direct mail, seminars, public relations, trade shows,
travel and other related selling and marketing expenses. Sales and marketing
expenses were $2.6 million and $31.0 million for the fiscal years ended January
31, 1996 and 1997, respectively, representing 50% of total revenues for each
period. The increase in absolute dollars was due primarily to the Company's
acquisitions, expansion of the Company's direct sales force and an increase in
marketing personnel and activities. The Company believes that the dollar amount
of sales and marketing expenses will continue to increase as the Company expands
its sales and marketing organization.
    
 
   
    RESEARCH AND DEVELOPMENT.  Research and development expenses include
engineering personnel and related expenses as well as consulting costs
associated with new product development and enhancement of existing products. In
accordance with Statement of Financial Accounting Standards No. 86, ACCOUNTING
FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED,
software development costs are expensed as incurred until technological
feasibility has been established, at which time such costs are capitalized until
the product is available for general release to customers. To date, the
establishment of technological feasibility of the Company's products and general
release of such software have substantially coincided. As a result, software
development costs qualifying for capitalization have been insignificant, and
therefore, the Company has not capitalized any software development costs.
Research and development expenses were $3.2 million and $18.2 million for the
fiscal years ended January 31, 1996 and 1997, respectively, representing 63% and
30% of total revenues in each period, respectively. The increase in dollar
amount was attributed to an increase in
    
 
                                       25
<PAGE>
   
personnel and related expenses, including a significant increase in such
expenses resulting from the acquisition of TUXEDO. The decrease in research and
development expenses as a percentage of total revenues was primarily due to the
substantial increase in revenues. The Company expects that the dollar amount of
research and development expenses will continue to increase as the Company
continues to commit substantial resources to product development and engineering
in future periods.
    
 
   
    GENERAL AND ADMINISTRATIVE.  General and administrative expenses include
personnel costs for administration, finance, human resources, information
technology and general management, as well as amortization of goodwill related
to the purchase of IMC. General and administrative expenses were $3.1 million
and $12.7 million for the fiscal years ended January 31, 1996 and 1997,
respectively, representing 60% and 21% of total revenues for each period,
respectively. The increase in dollar amount was attributed to the expansion of
the Company's general and administrative staff and associated expenses necessary
to manage and support the Company's growth. Amortization of goodwill will total
$187,000 per year through September 30, 2000. To the extent future events result
in the impairment of goodwill, amortization expenses may occur sooner than the
Company expects. The decrease in general and administrative expenses as a
percentage of total revenues was primarily due to the substantial increase in
revenues. The Company expects that the dollar amount of general and
administrative expenses will continue to increase in the future as the Company
expands its staffing and incurs higher costs associated with being a public
company.
    
 
   
    WRITE-OFF OF IN-PROCESS RESEARCH AND DEVELOPMENT.  Write-off of in-process
research and development is related to the Acquisitions and totaled $11.2
million for the fiscal year ended January 31, 1996, consisting of IMC ($5.2
million), VI Systems ($860,000) and ITI ($5.1 million). The total of $62.2
million for the fiscal year ended January 31, 1997 included the acquisitions of
TUXEDO ($60.9 million) and CST ($1.3 million). See Note 2 of Notes to BEA
Systems, Inc. Consolidated Financial Statements.
    
 
   
    If the pending transaction with Digital is completed, the Company will incur
an estimated charge ranging from approximately $14 million to $16 million in the
fiscal quarter in which the closing occurs for write-off of purchased in-process
research and development.
    
 
  PROVISION FOR INCOME TAXES
 
   
    The Company has experienced operating losses to date and incurred income tax
expense of $60,000 and $800,000 for the fiscal years ended January 31, 1996 and
1997, respectively. The income tax expense is comprised primarily of foreign
income tax withholding.
    
 
                                       26
<PAGE>
   
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
    
 
   
    The following tables set forth certain unaudited quarterly financial data
for the five most recent quarters and the percentage of total revenues
represented by each line item. The Company believes that all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the selected quarterly information
when read in conjunction with the Consolidated Financial Statements and the
Notes thereto included elsewhere herein. In view of the Acquisitions and other
factors, the Company believes that quarterly total revenues and operating
results should not be relied upon as indications of future performance or
results for the fiscal year ending January 31, 1998 or any other future period.
    
 
   
<TABLE>
<CAPTION>
                                                                            QUARTER ENDED
                                                       -------------------------------------------------------
                                                       JAN. 31,    APR. 30,   JUL. 31,    OCT. 31,   JAN. 31,
                                                         1996        1996       1996        1996      1997(1)
                                                       ---------  ----------  ---------  ----------  ---------
                                                                (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                    <C>        <C>         <C>        <C>         <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues:
  License Revenues...................................  $   3,071  $    5,484  $   9,678  $   11,693  $  19,984
  Service Revenues...................................      1,309       1,367      3,804       4,323      5,265
                                                       ---------  ----------  ---------  ----------  ---------
    Total Revenues...................................      4,380       6,851     13,482      16,016     25,249
Total Cost of Revenues...............................      2,217       2,494      4,243       5,761      6,109
                                                       ---------  ----------  ---------  ----------  ---------
Gross Margin.........................................      2,163       4,357      9,239      10,255     19,140
Operating Expenses:
  Research and Development...........................      2,713       3,097      4,673       4,868      5,545
  Sales and Marketing................................      1,598       3,912      6,450       9,049     11,559
  General and Administrative.........................      2,122       2,579      2,778       3,519      3,856
  Write-off of In-Process Research and Development...      5,274      60,948      1,300          --         --
                                                       ---------  ----------  ---------  ----------  ---------
    Total Operating Expenses.........................     11,707      70,536     15,201      17,436     20,960
                                                       ---------  ----------  ---------  ----------  ---------
Income (Loss) from Operations........................     (9,544)    (66,179)    (5,962)     (7,181)    (1,820)
Other Income (Expense)...............................         42        (117)         1         209        (89)
Interest Expense.....................................        (68)     (1,117)    (1,765)     (2,059)    (1,786)
                                                       ---------  ----------  ---------  ----------  ---------
Income (Loss) before Income Taxes....................     (9,570)    (67,413)    (7,726)     (9,031)    (3,695)
Provision for Income Taxes...........................         60          38        116         146        500
                                                       ---------  ----------  ---------  ----------  ---------
Net Income (Loss)....................................  $  (9,630) $  (67,451) $  (7,842) $   (9,177) $  (4,195)
                                                       ---------  ----------  ---------  ----------  ---------
                                                       ---------  ----------  ---------  ----------  ---------
Pro Forma Net Income (Loss) Per Share................  $   (0.19) $    (1.35) $   (0.16) $    (0.18) $   (0.08)
                                                       ---------  ----------  ---------  ----------  ---------
                                                       ---------  ----------  ---------  ----------  ---------
Shares Used In Computing Pro Forma Net Income (Loss)
  Per Share..........................................     49,941      50,013     50,376      52,062     52,197
                                                       ---------  ----------  ---------  ----------  ---------
                                                       ---------  ----------  ---------  ----------  ---------
</TABLE>
    
 
- --------------
 
   
(1) Includes expenses attributable to amortization of intangible assets
    resulting from acquisitions in the amount of $2.5 million.
    
 
                                       27
<PAGE>
 
   
<TABLE>
<CAPTION>
                                                         QUARTER ENDED
                                     -----------------------------------------------------
                                     JAN. 31,   APR. 30,    JUL. 31,   OCT. 31,   JAN. 31,
                                       1996       1996        1996       1996       1997
                                     --------   ---------   --------   --------   --------
<S>                                  <C>        <C>         <C>        <C>        <C>
AS A PERCENTAGE OF TOTAL REVENUES:
Revenues:
  License Revenues.................     70%         80%        72%        73%        79%
  Service Revenues.................     30          20         28         27         21
                                       ---      ---------     ---        ---        ---
    Total Revenues.................    100         100        100        100        100
Total Cost of Revenues.............     51          36         31         36         24
                                       ---      ---------     ---        ---        ---
Gross Margin.......................     49          64         69         64         76
Operating Expenses:
  Research and Development.........     62          45         35         31         22
  Sales and Marketing..............     37          57         48         56         46
  General and Administrative.......     48          38         20         22         15
  Write-off of In-Process Research
    and Development................    120         890         10         --         --
                                       ---      ---------     ---        ---        ---
    Total Operating Expenses.......    267        1030        113        109         83
                                       ---      ---------     ---        ---        ---
Income (Loss) from Operations......   (218)       (966)       (44)       (45)        (7)
 
Other Income (Expense).............      1          (2)        --          1         (1)
Interest Expense...................     (2)        (16)       (13)       (12)        (7)
                                       ---      ---------     ---        ---        ---
Income (Loss) before Income
  Taxes............................   (219)       (984)       (57)       (56)       (15)
Provision for Income Taxes.........      1           1          1          1          2
                                       ---      ---------     ---        ---        ---
Net Income (Loss)..................   (220)%      (985)%      (58)%      (57)%      (17)%
                                       ---      ---------     ---        ---        ---
                                       ---      ---------     ---        ---        ---
</TABLE>
    
 
   
    Total revenues have increased each quarter over the past five quarters from
$4.4 million in the quarter ended January 31, 1996 to $25.2 million in the
quarter ended January 31, 1997. These increases were primarily attributable to
the acquisition of BEA TUXEDO in February 1996 and other acquisitions during the
period, increasing market acceptance of BEA TUXEDO and related services, the
expansion of the Company's direct and indirect sales organizations and growth in
order sizes for the Company's products.
    
 
   
    Cost of revenues includes the amortization of intangible assets related to
the acquisitions of IMC, ITI, TUXEDO, USL France and CST. The amounts included
in the five quarters beginning with the quarter ended January 31, 1996 and
ending with the quarter ended January 31, 1997 were $809,000 (18% of revenues);
$1.6 million (23% of revenues); $2.2 million (16% of revenues); $2.3 million
(14% of revenues); and $2.5 million (10% of revenues) for the respective
periods.
    
 
   
    Gross margin increased from 49% in the quarter ended January 31, 1996 to 76%
in the quarter ended January 31, 1997. This increase resulted primarily from the
increase in total revenues during the period as compared to the relatively fixed
level of amortization charges included in cost of revenues during this period.
    
 
   
    Total operating expenses have varied substantially both in absolute dollars
and as a percentage of total revenues during the period, due primarily to large
write-offs of in-process research and development. These write-offs occurred in
the quarters ended January 31, 1996, April 30, 1996, and July 31, 1996.
Excluding write-offs for in-process research and development, the dollar amounts
of operating expenses have increased in each successive quarter during the
period. However, such expenses decreased as a percentage of total revenues
during the three quarters ended July 31, 1996. During the quarter ended October
31, 1996, total operating expenses (excluding write-offs of in-process research
and development) decreased to 109% of total revenues from 113% of total
revenues. General
    
 
                                       28
<PAGE>
   
and administrative expenses include $47,000 per quarter in all quarters for the
amortization of goodwill expense associated with the acquisition of IMC. While
the Company expects operating expenses to increase in absolute dollars over the
next several quarters, to the extent that revenues increase, management believes
that operating expenses as a percentage of revenues will decline.
    
 
    The Company expects that it will experience significant fluctuations in
future quarterly operating results as a result of many factors, including, among
others: the size and timing of orders; introduction or enhancement of products
by the Company or its competitors; market acceptance of middleware products; the
lengthy sales and implementation cycle for the Company's products and the
potential for significant delays; market acceptance of new products and product
enhancements; technological changes in computer systems and environments; the
structure and timing of future acquisitions of businesses, products and
technologies, if any; increased competition; the ability of the Company to
develop, introduce and market new products on a timely basis; changes in the
Company's or its competitors' pricing policies; customer order deferrals in
anticipation of future new products and product enhancements, if any; the
Company's success in expanding its sales and marketing programs; mix of products
and services sold; mix of distribution channels; ability to meet the service
requirements of its customers; costs associated with acquisitions; loss of key
personnel; fluctuations in foreign currency exchange rates; and general economic
conditions. As a result of all of these factors, the Company believes that
quarterly revenues and operating results are difficult to forecast and
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
 
   
LIQUIDITY AND CAPITAL RESOURCES
    
 
   
    Since inception, the Company has financed its operations, and acquisitions
of subsidiaries and the distribution rights to TUXEDO, primarily through the
private sale of equity securities of approximately $51 million, notes payable of
approximately $83 million, financing of approximately $1 million under its
equipment lease line, borrowings on a revolving credit arrangement, and an
unsecured credit arrangement with the Company's majority stockholder.
    
 
   
    Under the terms of the revolving credit arrangement, the Company has the
ability to borrow up to $10 million and borrowing availability is based on the
aggregate of (i) a percentage of certain accounts receivable and (ii) $4.0
million. At January 31, 1997, the Company had borrowed $9.0 million and had an
additional borrowing availability of $1.0 million. The credit arrangement is
collateralized by the assets of the Company and also contains certain covenants.
As of January 31, 1997, the Company was in compliance with the covenants. The
credit arrangement bears interest at the LIBOR rate plus 5.125% (10.49% in
aggregate at January 31, 1997) and is scheduled to expire in April 1997.
However, the lender has verbally agreed to automatically renew the arrangement
for one year and allow the Company to borrow up to $10 million regardless of the
eligible trade receivable balance.
    
 
   
    Under the terms of the unsecured credit arrangement with the Company's
majority stockholder, the Company has the ability to borrow up to $10 million.
At January 31, 1997, the Company had borrowed $1.0 million and had an additional
borrowing availability of $9.0 million. Borrowings under the arrangement are
convertible, at the option of the lender, into shares of Common Stock at a price
equal to the net proceeds per share received by the Company upon the successful
completion of an initial public offering. The credit arrangement bears interest
at 11%. Outstanding borrowings and accrued interest are due upon the earlier of
the successful completion of an initial public offering or July 22, 1998.
    
 
   
    During the fiscal year ended January 31, 1996, the Company purchased
businesses and technologies for, in aggregate, $16.1 million in cash, a note
payable for $2.7 million and assumed $5.4 million of other liabilities. For the
fiscal year ended January 31, 1997, the Company purchased businesses and
technologies for, in aggregate, $5.5 million in cash, a note payable for
$916,000 and the assumption of $6.8 million in liabilities. Also during the
fiscal year ended January 31, 1997, the Company
    
 
                                       29
<PAGE>
   
acquired from Novell exclusive rights to TUXEDO for a note payable of $77.3
million, $200,000 in cash and $702,000 in assumed liabilities.
    
 
   
    In connection with the acquisition of IMC, the Company issued the $2.7
million note as partial consideration in the acquisition. The note was later
increased as a result of a subsequent bonus payment of $1.4 million due to
revenue levels achieved by IMC subsequent to acquisition. The note accrues
interest at 8%, with the principal and all accrued interest payable on the
earlier of October 2000 or the successful completion of a public offering of the
Company's equity securities. See "Use of Proceeds."
    
 
   
    The note issued for the exclusive license of TUXEDO calls for payments
aggregating $89.6 million. Interest was imputed at 8%, which resulted in the
recorded liability of $77.3 million. The note is secured by the rights to the
licensed software. The payments owed to Novell can be discounted by 8% if paid
prior to 30 days before the established due date. However, management does not
currently anticipate any early payments.
    
 
   
    The note payable issued for the purchase of Bay Technologies calls for
payments aggregating $1.0 million. Interest was imputed at 8%, which resulted in
the recorded liability of $916,000.
    
 
   
    In the fiscal years ending January 31, 1996 and 1997, respectively, the
Company used approximately $67,000 and $4.7 million, respectively, of cash to
purchase property and equipment, primarily for leasehold improvements, computers
and furniture and other office equipment. The Company also acquired equipment
with a cost of approximately $1.0 million under a capital lease line of credit
in fiscal 1997. At January 31, 1997, the Company had available borrowings of
$1.0 million under the capital lease line of credit. The Company had no other
material investing activities. As of January 31, 1997, the Company did not have
any material commitments for capital expenditures. Under the Digital Agreement,
the Company will be obligated following the closing of the transaction to make
aggregate payments to Digital of $22 million through February 2000. The Company
will be obligated to pay $5 million to Digital, $3 million of which will be due
on June 20, 1997 and $2 million of which will be due on the earlier of June 20,
1997 or 10 days after the purchase by Digital of $2 million worth of Common
Stock offered hereby. On or before February 1, 1998, 1999 and 2000, BEA will be
obligated to make payments to Digital of $2 million, $4 million and $11 million,
respectively; however, at Digital's election, certain portions of these payments
may be converted into shares of the Company's Common Stock at prices ranging
from 1.5 to 2.5 times the initial public offering price.
    
 
   
    At January 31, 1997, the Company had $3.3 million in cash and cash
equivalents and a working capital deficit of $32.8 million.
    
 
   
    Due to the relatively large dollar size of individual sales and the fact
that a substantial portion of the Company's accounts receivable from license
revenues have been generated within the last weeks of each quarter, the Company
has experienced significant fluctuations in its average days sales outstanding.
The Company believes that such fluctuations will continue in the future and will
continue to affect its liquidity, working capital and financial condition.
    
 
   
    The Company believes that the net proceeds from the offering, together with
its current cash balances, cash available under its lines of credit and cash
from operations will be sufficient to meet its working capital requirements
through January 31, 1998. Although operating activities may provide cash in
certain periods, to the extent that the Company experiences growth in the
future, the Company anticipates that its operating and investing activities may
use cash. Consequently, any such growth may require the Company to obtain
additional equity or debt financing. There can be no assurance that additional
financing will be available or, if available, that it will be on terms
satisfactory to the Company. See "Risk Factors--Substantial Future Capital
Needs."
    
 
                                       30
<PAGE>
   
SELECTED UNAUDITED PRO FORMA OPERATING RESULTS
    
 
   
    The selected unaudited pro forma condensed consolidated financial
information for the Company set forth below gives effect to the acquisition of
USL France. The historical and unaudited pro forma financial information set
forth below has been derived from, and is qualified by reference to, the
consolidated financial statements of the Company and USL France and should be
read in conjunction with the respective consolidated financial statements and
the notes thereto. The unaudited pro forma condensed consolidated statements of
operations data for the year ended January 31, 1997 gives effect to the
acquisition as if it had occurred on February 1, 1996. The unaudited pro forma
condensed consolidated financial information set forth below reflects certain
adjustments, including, among others, adjustments (i) to eliminate revenues and
expenses which occurred between the entities prior to the acquisition by the
Company and (ii) to reflect the amortization of purchased intangible assets as
though the business had been combined for the full period. The information set
forth below should be read in conjunction with the other information contained
in "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Financial Statements of the Company and USL France. The
unaudited pro forma condensed consolidated financial information set forth below
does not purport to represent what the consolidated results of operations or
financial condition of the Company would have been if it had acquired USL France
on such date or to project the future consolidated results of operations or
financial condition of the Company. See "Risk Factors--Past and Future
Acquisitions."
    
 
                                       31
<PAGE>
   
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
                      FOR THE YEAR ENDED JANUARY 31, 1997
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
    
 
   
<TABLE>
<CAPTION>
                                                                       USL FRANCE
                                                                        FOR THE                       PRO FORMA
                                                        BEA FOR THE   PERIOD FROM      PRO FORMA     FOR THE YEAR
                                                         YEAR ENDED   FEBRUARY 1,      BUSINESS         ENDED
                                                        JANUARY 31,   1996 TO MAY     COMBINATION    JANUARY 31,
                                                            1997        5, 1996       ADJUSTMENTS        1997
                                                        ------------  ------------  ---------------  ------------
<S>                                                     <C>           <C>           <C>              <C>
Total Revenues........................................   $   61,598    $    1,183   $     (260)(a)    $   62,521
Total Cost of Revenues................................       18,607           886           (7)(a)(b)      19,486
                                                        ------------  ------------  ---------------  ------------
Gross Margin..........................................       42,991           297         (253)           43,035
Operating Expenses:
  Research and Development............................       18,183            --                         18,183
  Sales and Marketing.................................       30,970           341                         31,311
  General and Administrative..........................       12,732            42                         12,774
  Write-off of In-Process Research and Development....       62,248                                       62,248
                                                        ------------  ------------  ---------------  ------------
    Total Operating Expenses..........................      124,133           383           --           124,516
                                                        ------------  ------------  ---------------  ------------
Income (Loss) from Operations.........................      (81,142)          (86)        (253)          (81,481)
Interest Expense......................................       (6,727)          (10)          --            (6,737)
Other Income (Expense)................................            4            32           --                36
                                                        ------------  ------------  ---------------  ------------
Income (Loss) before Income Taxes.....................      (87,865)          (64)        (253)          (88,182)
Provision for Income Taxes............................          800            58                            858
                                                        ------------  ------------  ---------------  ------------
Net Income (Loss).....................................   $  (88,665)   $     (122)  $     (253)       $  (89,040)
                                                        ------------  ------------  ---------------  ------------
                                                        ------------  ------------  ---------------  ------------
Pro Forma Net Income (Loss) Per Share(c)..............                                                $    (1.74)
                                                                                                     ------------
                                                                                                     ------------
Pro Forma Weighted Average Number of Common Shares
  Outstanding(c)......................................                                                    51,162
                                                                                                     ------------
                                                                                                     ------------
</TABLE>
    
 
- --------------
 
   
    PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED JANUARY 31, 1997, ARE AS FOLLOWS:
    
 
   
(a) Reflects the elimination of revenues and related cost of revenue on
    transactions between the entities prior to acquisition by the Company.
    
 
   
(b) Reflects the amortization of acquired distribution rights as though USL
    France had been included for the full period. Additional amortization totals
    $253,000 and represents approximately three months of amortization of
    acquired distribution rights of $2,672,000 which are being amortized over a
    period of thirty months. Amortization subsequent to May 5, 1996 is included
    in the historical results of the Company.
    
 
   
(c) Pro forma net income (loss) per share is computed by dividing pro forma net
    income (loss) by the pro forma weighted average number of shares used
    elsewhere in this Prospectus.
    
 
                                       32
<PAGE>
                                    BUSINESS
 
INTRODUCTION
 
   
    BEA Systems, Inc. ("BEA" or the "Company") designs, develops, markets and
supports software used by large organizations to enable and support their most
critical business processes. The Company's Enterprise Transaction Framework is
an open, integrated middleware software platform for developing, deploying and
managing distributed mission-critical computer software applications. The core
of the BEA Enterprise Transaction Framework is BEA TUXEDO, a software engine
that manages transactions and communications for enterprise-wide applications,
enabling organizations to realize the benefits offered by distributed computing
environments while preserving the traditional advantages of mainframe-based
systems. BEA products provide a middleware software infrastructure that supports
thousands of simultaneous users distributed worldwide. With the pending
acquisition of exclusive rights to Digital MessageQ (to be renamed BEA MessageQ)
and Digital ObjectBroker (to be renamed BEA ObjectBroker), the Company is
seeking to extend its Enterprise Transaction Framework to incorporate
comprehensive message-oriented middleware for application integration and new
object-oriented technologies. In addition to its software products, BEA provides
its customers with complete solutions through a range of professional services
offerings.
    
 
   
    BEA's products are marketed and sold worldwide, principally through the
Company's direct sales force and also indirectly through third parties. BEA's
products have been adopted in a wide variety of industries, including banking
and finance, manufacturing, retail, technology, telecommunications and
transportation. During the fiscal year ended January 31, 1997, BEA sold new
product licenses to over 170 customers, including over 100 customers that were
not inherited through acquisitions. The total number of customers using products
that have been acquired and developed by BEA is greater than 600 worldwide.
These customers include: The AT&T Corp., Bell Communications Research, Inc.,
Damark International Inc., Discover Card Trust, Federal Express Corp., Fidelity
Investments, Gap Inc., J.J. Kenney, MBNA, McKesson Corp., Motorola Inc., Nippon
Telephone & Telegraph, Northwest Airlines Corp., U.K. Employment Services, Union
Bank of Switzerland, Union Pacific Railroad and Walgreens Co. In addition, ISVs
such as PeopleSoft Inc. and Clarify, Inc. embed BEA TUXEDO into their own
product offerings in order to improve the scalability, portability and
interoperability of their products.
    
 
INDUSTRY BACKGROUND
 
    Over the past decade, the information systems of many large organizations
have been evolving from traditional mainframe-based systems to distributed
computing environments. This evolution has been driven by the benefits offered
by distributed computing, including lower incremental technology costs; faster
application development and deployment; increased flexibility; and improved
access to business information. Despite these benefits, large-scale
mission-critical applications that enable and support fundamental business
processes, such as airline reservations, credit card processing and customer
billing and support systems, have largely remained in mainframe environments.
For several decades, the high levels of reliability, scalability, security,
manageability and control required for these complex, transaction-intensive
systems within thousands of organizations have been provided by mainframe
middleware software such as IBM's Customer Information and Control Systems
("CICS"). Today, according to estimates by The Standish Group, there are more
than 50,000 CICS licenses and over two billion lines of CICS code in use for
mission-critical applications worldwide. These mainframe environments, however,
suffer from several shortcomings, including inflexibility, lengthy development
and maintenance cycles and limited, character-based user interfaces.
Increasingly, these shortcomings are forcing many organizations to seek out
technologies that will enable them to overcome the limitations of distributed
computing for mission-critical applications while providing the robust computing
infrastructure previously unavailable outside the mainframe environment.
 
                                       33
<PAGE>
  THE LIMITATIONS OF DISTRIBUTED COMPUTING FOR LARGE-SCALE MISSION-CRITICAL
    APPLICATIONS
 
    While some mission-critical applications have been successfully migrated to
distributed computing environments, the inherent technical and business
limitations of distributed computing have generally precluded its use for the
complex, large-scale, transaction-intensive applications that are critical to
the ongoing operations of many organizations. These limitations include the
following:
 
    LIMITED SCALABILITY, RELIABILITY AND INTEROPERABILITY.  Distributed
computing applications are generally limited in scalability to the capacity of
database and application servers. Adding servers requires significant rewriting
of application logic because existing applications are written in such a manner
that each component must know the specific location within the system of all
other components. In addition, in distributed computing environments, a
significant portion of an application's business logic typically resides on the
client (a desktop PC or workstation), while the database resides on one or more
servers. Large amounts of data must travel over the network, limiting network
performance, while application changes or updates must be deployed and monitored
at each client, making effective network administration and management
difficult. As a result of these factors, the addition of more clients and
servers may actually lead to a decrease in system performance. Also, additional
servers exponentially increase the difficulty of managing multiple resources and
dynamically balancing processing loads across the network as a result of several
factors, including: the risk of interruption to critical business processes due
to the inability to make online changes to applications, the complexities that
arise in ensuring that any changes are reflected across the network in a
comprehensive and consistent manner and the need to reoptimize system
performance in light of these changes.
 
    Mission-critical applications must maintain the highest levels of
reliability and data and transaction integrity, all of which are very difficult
to achieve in distributed computing environments. These requirements mandate
comprehensive monitoring and control of all system components in order to verify
the correct completion of each processing step. In addition, most of these
environments are heterogeneous, requiring applications to interoperate across a
variety of hardware and software platforms. The lack of scalability, reliability
and interoperability has greatly limited the use of distributed computing for
large-scale, mission-critical applications.
 
    DIFFICULTY IN LEVERAGING INVESTMENTS IN LEGACY TECHNOLOGY.  Many
organizations have significant, long-standing investments in their
mainframe-based systems and the mission-critical applications running on these
systems. According to IDC, approximately $250 billion has been spent to date on
mainframe system hardware purchases. Distributed computing technologies have
provided minimal integration or interoperability with existing mission-critical
applications on the mainframe; therefore, achieving the benefits of distributed
computing has generally required organizations to build entirely new
applications. This typically means abandoning previous investments in legacy
applications and increases the risk of costly business interruptions when
organizations attempt to migrate mission-critical applications from the
mainframe.
 
    DIFFICULTY IN LEVERAGING EXISTING PERSONNEL AND SKILLS.  Over time,
organizations have invested extensively in mainframe-based programmers and
technology. The Standish Group estimates that there are currently one million
COBOL programmers worldwide. These programmers are well-versed in the business
logic, programming languages and development methodologies necessary to build
mainframe-based mission-critical applications. The successful implementation of
distributed computing, however, requires additional expertise in various other
skill sets and emerging technologies. Organizations that seek to implement
distributed computing for mission-critical applications are thus faced with the
choice of either retraining existing programmers or replacing them with new
programmers possessing the requisite skills, but who must still be trained in
the organization's business processes. These alternatives are extremely costly,
have no guarantee of success and raise the risk of potential disruptions to
critical business processes.
 
                                       34
<PAGE>
  MIDDLEWARE AS THE MEANS TO IMPLEMENT DISTRIBUTED MISSION-CRITICAL APPLICATIONS
 
    In order to overcome the technical and business limitations of distributed
computing for large-scale, mission-critical applications, organizations are
turning to a new architecture that incorporates middleware--a software
infrastructure that is designed to connect clients, applications and databases.
A sufficiently robust middleware product would enable developers to create
large-scale, mission-critical applications that can be deployed and interoperate
across multiple heterogeneous platforms, databases and operating systems while
providing the flexibility to select those platforms that best suit a particular
application environment. Such a software infrastructure would provide the
traditional benefits of mainframe-based computing--scalability, reliability,
security, manageability and control--while taking advantage of the opportunities
offered by distributed computing.
 
  MARKET OPPORTUNITY
 
    The Company believes that robust middleware software, and the training and
professional services capabilities required to support it, are crucial to
enabling organizations to extend their mission-critical applications to take
advantage of the benefits offered by distributed computing. The Standish Group
estimates that U.S. companies spent over $60 billion in 1996 to modernize their
mainframe-based applications to include distributed client/server and Internet
technologies and that this annual spending rate will double by the year 2000.
The Company believes that the potential benefits to organizations of distributed
computing for mission-critical applications are significant. In order to be
successful, however, distributed computing environments must provide many of the
desirable capabilities of current mainframe-based systems and must preserve and
leverage existing investments in technology and programmers.
 
THE BEA SOLUTION
 
   
    BEA's products and services enable companies to overcome the limitations of
distributed computing for mission-critical applications. BEA's Enterprise
Transaction Framework, based upon time-tested and market-proven BEA TUXEDO
technology, provides a middleware solution that addresses the scalability,
manageability, platform independence, interoperability, integrity, reliability
and security requirements of complex, large-scale, distributed computing in the
heterogeneous environments present in most major organizations. The BEA solution
allows companies to leverage their substantial investments in legacy systems,
significantly extending the useful lives of mainframe and programmer assets
while fully exploiting the benefits offered by distributed computing. The
incorporation of BEA MessageQ and BEA ObjectBroker into the Enterprise
Transaction Framework will extend its capabilities to include message-oriented,
middleware-based and object-oriented programming methodologies.
    
 
    The BEA solution provides the following benefits:
 
  PROVIDES A TESTED, PROVEN INFRASTRUCTURE FOR DISTRIBUTED MISSION-CRITICAL
    APPLICATIONS
 
    BEA TUXEDO, the foundation of the BEA Enterprise Transaction Framework, is a
time-tested and market-proven infrastructure for distributed mission-critical
applications. By providing a robust, scalable, cost-effective
infrastructure--formerly available only on mainframe computers--BEA enables
mission-critical applications to run in distributed computing environments. BEA
TUXEDO overcomes the limitations on scalability that characterize distributed
computing environments by providing a messaging and dynamic load balancing
infrastructure that determines the location and syntax of any component without
requiring them to be programmed within an application. This separation of
business logic from location and syntax enables an arbitrary number of servers
to be added to the network with processing loads being balanced dynamically,
thereby providing mainframe-like scalability and flexibility. This separation
also enables applications written using BEA TUXEDO to reflect more closely
underlying business processes, thereby increasing an organization's flexibility
with respect to the design, development, implementation and adaptability of its
mission-critical applications.
 
                                       35
<PAGE>
   
    BEA TUXEDO's application, transaction and fault management systems combine
to ensure data and transaction integrity, enabling distributed computing
environments to achieve mainframe-like reliability and security. By using BEA's
products and services, organizations do not have to build their own custom
infrastructure solutions, a costly and time-consuming process that is often
beyond their technical capabilities and resources. Instead, organizations can
focus on developing and deploying their mission-critical applications, with the
assurance that BEA TUXEDO will ensure their scalability, reliability,
interoperability and security. The pending acquisition of MessageQ and
ObjectBroker is intended to extend the capabilities of the Enterprise
Transaction Framework. MessageQ is optimized for integrating disparate
distributed applications across a broad range of hardware platforms and
operating systems, providing a fast and reliable queuing and
publish-and-subscribe system for brokering messages and enabling customers to
communicate among existing applications through one standard enterprise
middleware infrastructure. BEA ObjectBroker allows customers to deploy
mission-critical object-based applications. The planned integration of BEA
TUXEDO and BEA ObjectBroker will enable objects to interoperate with BEA TUXEDO
services, providing a migration path to object technology.
    
 
  PRESERVES THE VALUE OF INVESTMENTS IN LEGACY SYSTEMS AND SKILLS
 
    BEA products and services preserve an organization's investment in mainframe
technology and programmers while allowing customers to take advantage of the
capabilities of distributed computing. Customers do not need to change or
replace reliable, robust mission-critical applications in which they have made
significant investments; rather, BEA's products and services enable them to
extend and evolve these applications to take advantage of the benefits of
distributed computing. BEA's solutions allow mainframe software to be extended
to distributed computing platforms with minimal change, protecting the
investment in mainframe-based systems while permitting an orderly transition to
a distributed computing environment. Because BEA's products allow the mainframe
to be treated as just another node on the network, programmers can continue to
develop, deploy and maintain mainframe-based applications as before. This allows
current programmers who are well-versed in the business processes and logic of
the organization to work more efficiently without needing to be trained in the
skills necessary to maintain a reliable distributed computing environment.
Additionally, BEA's products enable customers to adopt and integrate new
technologies--such as the Internet and object-oriented development
technologies--as they emerge.
 
  ENABLES INTEROPERABILITY ACROSS A BROAD RANGE OF PLATFORMS
 
   
    BEA TUXEDO runs on virtually all major commercial platforms, providing
interoperability across heterogeneous computing environments. This allows
organizations to develop mission-critical applications that are independent of
specific hardware, software and networking technologies. This interoperability
enables organizations to avoid the cost, delay and technical risks associated
with rewriting of applications to be compatible with new technologies and
computer systems. By providing an open application programming interface for BEA
TUXEDO, programmers may write applications only to that interface and can then
rely on BEA TUXEDO to execute their applications across multiple platforms.
MessageQ, to which the Company has agreed to acquire exclusive rights from
Digital, runs on all major UNIX platforms, Windows NT, Windows 95, Windows 3.1,
Open VMS, Macintosh, OS/2, MS-DOS and selected IBM environments via LU 6.2.
ObjectBroker, which the Company is also acquiring from Digital, also runs on all
major UNIX platforms, as well as Windows NT, Windows 95, Windows 3.1 and Open
VMS. Currently, BEA TUXEDO supports over 40 operating platforms, including the
market-leading UNIX platforms, Windows NT and IBM MVS. BEA TUXEDO also supports
all XA-compliant relational databases available as of January 31, 1997,
including products from IBM Corporation, Informix Software, Inc., Microsoft
Corporation, Oracle Corporation and Sybase Inc. BEA TUXEDO also works with over
40 development, testing and management tools.
    
 
                                       36
<PAGE>
  REDUCES TIME AND COST OF APPLICATION DEVELOPMENT AND DEPLOYMENT
 
    Application development using the BEA Enterprise Transaction Framework
allows programmers to design the business logic in their applications
independent of system deployment issues. Once the business logic has been
programmed, the BEA Enterprise Transaction Framework provides the translations
and interface conversions necessary to run the application in a distributed
computing environment. This reduces the time and cost of developing and
deploying applications because programmers need focus only on the business
logic, while the BEA Enterprise Transaction Framework ensures that these changes
are incorporated automatically in a comprehensive and consistent manner. Because
of this segregation, BEA's products enable an entire worldwide system to be
tuned and administered, servers to be added and deleted and the network
configuration to be altered, without changing the business application.
 
  EXTENDS MISSION-CRITICAL APPLICATIONS TO THE INTERNET AND INTRANETS
 
    BEA Jolt enables the extension of enterprise-wide mission-critical
applications to the Internet and intranets without reprogramming. BEA Jolt
translates between Java applets and BEA TUXEDO, ensuring that transaction
integrity is maintained despite unreliable connections and the Internet's
inherent inability to retain the current state of a transaction. By enabling
Internet and intranet applications to meet the stringent scalability,
reliability and availability requirements for mission-critical applications,
many of the challenges of electronic commerce can be overcome. See "Risk
Factors--Technological Change; Dependence on New Products and Product
Enhancements."
 
THE BEA STRATEGY
 
    The Company's strategy is to leverage its current leadership position in
distributed transaction processing in order to establish its middleware
solutions as the industry standard for developing, deploying and managing
large-scale mission-critical applications for distributed environments.
 
    The key elements of the Company's strategy are:
 
  ENHANCE BEA'S TECHNOLOGY LEADERSHIP
 
   
    The BEA Enterprise Transaction Framework is based upon BEA TUXEDO, a
market-tested and proven technology initially developed at AT&T Bell Labs in
1984. The Company, which acquired the rights to TUXEDO in February 1996, intends
to continue to invest in the enhancement of its core BEA TUXEDO technology. BEA
expects to add new functionality to all components of the BEA Enterprise
Transaction Framework. Over the course of the next 12 months and subject to
completion of the Digital transaction, planned releases of BEA products will
complete the integration of BEA TUXEDO with BEA MessageQ and BEA ObjectBroker,
improve electronic commerce capabilities and increase the number of platforms
supported to more than 50.
    
 
  EXPAND BEA'S GLOBAL SOLUTIONS CHANNEL
 
   
    Due to the strategic nature of the Company's products, customers require BEA
to provide complete global services and support. As of January 31, 1997, the
Company had 28 offices in 15 countries worldwide and intends to continue to
expand its global distribution facilities to provide the direct sales, services,
training and support necessary to enable customers to develop, deploy and manage
distributed mission-critical applications. In addition, the Company will
continue to develop third-party relationships to augment its sales, services,
training and support capabilities.
    
 
  PROMOTE THE EMBEDDING OF BEA TUXEDO IN ISV APPLICATIONS
 
    BEA will continue to work with ISVs to embed BEA TUXEDO into their product
offerings. By licensing its products in this manner, the Company aims to
accelerate the acceptance of BEA's products and
 
                                       37
<PAGE>
establish these products as the de facto standard middleware solution. ISVs can
benefit significantly from embedding BEA software into their product offerings,
enabling them to scale the number of clients supported, eliminate most hardware
porting concerns and provide interoperability with other applications based on
the BEA Enterprise Transaction Framework. ISVs that have already embedded BEA
software into their products include Clarify Inc., Cycare Systems, Inc., Filoli
Information Systems and PeopleSoft Inc.
 
  LEVERAGE STRATEGIC PARTNERSHIPS
 
    The sale of middleware solutions for distributed mission-critical
applications requires significant expertise and time spent with potential
customers. By leveraging its strategic partnerships with hardware OEMs, ISVs,
systems integrators and consultants, the Company is able to extend the reach of
its direct sales force. The Company intends to strengthen existing relationships
with key industry players, such as Andersen Consulting, Hewlett-Packard
Corporation and Sun Microsystems, as well as develop new relationships, in order
to increase market awareness and demand and shorten the sales cycle for BEA's
products.
 
  FACILITATE THE EMERGENCE OF ELECTRONIC COMMERCE OVER THE INTERNET
 
    The Company intends to provide the software and services necessary to enable
businesses to conduct safe, reliable commercial transactions over the Internet
while making use of their existing mission-critical applications. In order to
provide robust commerce over the Internet, an application must be able to
accommodate unreliable connections, massive scalability requirements and an
inherent inability to retain the current state of a transaction. With BEA Jolt
and the BEA Enterprise Transaction Framework, the Company provides both the
middleware infrastructure and Java-based technology to meet these technical
challenges and to enable an organization to extend its mission-critical
applications to the Internet and intranets without reprogramming. See "Risk
Factors--Technological Changes; Dependence on New Products and Product
Enhancements."
 
MARKETS AND CUSTOMERS
 
   
    The total number of licensees using BEA TUXEDO and related products is
greater than 1,200 worldwide. For the fiscal year ended January 31, 1997, BEA
sold new product licenses to over 170 customers, including over 100 customers
that were newly-developed by the Company. The Company's target end-user
customers are organizations with sophisticated, high-end information systems
with numerous, often geographically dispersed users and diverse, heterogeneous
computing environments. Customers are generally mainframe-reliant or have
large-scale client/server implementations that handle very high volumes of
business transactions. The Company's customers use BEA products as a middleware
platform for developing, deploying and managing mission-critical applications
key to the customer's business.
    
 
                                       38
<PAGE>
   
    The following is a representative list of the organizations that accounted
for at least $100,000 in revenues to the Company during the fiscal year ended
January 31, 1997:
    
 
   
<TABLE>
<CAPTION>
TELECOMMUNICATIONS           BANKING AND FINANCE          GOVERNMENT
- ---------------------------  ---------------------------  ---------------------------
<S>                          <C>                          <C>
Alltel Corp.                 Banco del Atlantico          Finnish Ministry of Labor
Ameritech Corp.              Cybercash, Inc.              Finnish Post
AT&T Corp.                   First Datacard               Greek Ministry of Finance
AT&T Wireless                MBNA                         Swedish Police
Bell Atlantic Corp.          Societe Generale             Swedish Tax Office
Bell Communications          Swiss Life                   Swedish Labor Union
 Research, Inc.              RBC Dominion                 United Utilities
Cincinnati Bell Information  Union Bancaire Privee        United States Postal
 Systems, Inc.               Union Bank of Switzerland     Service
Deutsche Telecom             DISTRIBUTION AND             RETAIL
France Telecom               TRANSPORTATION               Broadway & Seymour Inc.
Lucent Technologies Inc.     Federal Express Corp.        Shopright Checkers
MCI Communications Corp.     McKesson Corp.               Walgreens Co.
Motorola Inc.                Northwest Airlines Corp.
Nynex Cablecommunication     Renault
 Group Inc.                  Union Pacific Railroad
Nippon Telephone and
 Telegraph
Pacific Bell
Southern New England
 Telecommunications
 Corporation
Telecom Finland
</TABLE>
    
 
    In addition to direct sales to end-user customers, BEA works with systems
and software integrators that incorporate BEA products for resale. The Company
also sells BEA TUXEDO to software and computer hardware providers to embed into
their application software or software toolsets. These customers include the
following organizations:
 
   
<TABLE>
<CAPTION>
                                                             SYSTEMS INTEGRATORS/
       HARDWARE OEMS                    ISVS                      CONSULTANTS
- ---------------------------  ---------------------------  ---------------------------
<S>                          <C>                          <C>
Bull Group                   CableData                    Andersen Consulting
Data General Corporation     Clarify Inc.                 Cambridge Technology
Digital Equipment Corp.      Cylink Corporation           Partners
Fujitsu                      Filoli Information Systems   Computer Science
Hewlett-Packard              Minnesota Mining and         Corporation
Hyundai                       Manufacturing Co.           Electronic Data Systems
ICL plc                      Nomad Software               Corporation
Lucky Goldstar               PeopleSoft Inc.              Perot Systems
NEC                          Sybase Inc.                  Steria (France)
Samsung                                                   Tangent Computer, Inc.
Sequent Computer Systems
 Inc.
Siemens-Nixdorf GmbH
Sun Microsystems
Tandem Computers Inc.
Unisys Corp.
</TABLE>
    
 
                                       39
<PAGE>
    See "Risk Factors--Expanding Distribution Channels and Reliance on Third
Parties"
 
    The following examples illustrate how some organizations are using BEA
products as a middleware framework to provide the infrastructure for enabling
mission-critical distributed transaction processing applications.
 
  AT&T
 
    AT&T's Consumer Customer Care system for bill inquiry and order entry
supports 7,500 services and 1,500 sales/customer contact positions 24 hours a
day, seven days a week and is key to AT&T's overall customer satisfaction
efforts. When AT&T decided to reengineer these applications to make use of
distributed systems, BEA TUXEDO was selected as the middleware solution to
provide reliable communications among the Customer Care system's many
applications. The decision to use BEA TUXEDO was based on the product's
asynchronous messaging technology and data-dependent routing capabilities, and
its ability to support multiple processors in a flexible configuration. In the
AT&T implementation of BEA TUXEDO, each processor is viewed as an independent
domain. By providing independent application services that can be used by all
domains, BEA TUXEDO isolates the impact of single processor failures, which has
enabled high availability applications to be supported without redundant
hardware. Overall, through this reengineering effort, AT&T is lowering unit
costs and improving customer and employee satisfaction in support of bill
inquiry and order entry functions.
 
  BANCO DEL ATLANTICO
 
    Banco del Atlantico ("B.A."), the fifth largest bank in Mexico, needed an
information system that would allow it to leverage its legacy Unisys platform
with its newly acquired Hewlett-Packard distributed systems. B.A. had over 4,000
personal computers and more than 100 local area networks running on
heterogeneous platforms at its branch banks and headquarters in Mexico City.
B.A. chose to invest in a middleware solution to increase total reliability and
security, allow for more consistent performance, and solve key connectivity
issues relating to integrating legacy and distributed systems. B.A. initially
evaluated BEA TUXEDO and several other products and chose BEA TUXEDO because of
its reliability and ability to provide seamless integration among all of B.A.'s
platforms. BEA TUXEDO provides a common layer in the B.A. infrastructure to
direct the complex interactions between applications and systems. Currently, all
of B.A.'s telephone banking applications and customer information database
applications are supported by BEA TUXEDO.
 
  DAMARK
 
    After years of growth, Damark, a major catalog direct marketing company,
reached an earnings plateau in early 1994, despite increased sales. Damark was
experiencing increasing paper and postage costs, which represent significant
elements of its direct marketing efforts to 10 million prospective customers.
The challenge faced by its IT department was to find the most efficient,
cost-effective way to receive and fill customer orders, which at times reach
fifteen thousand per day. The IT department evaluated middleware solutions that
were capable of handling peak order volume and scaling to incorporate multiple
call centers around the United States. Damark's specific requirements included
guaranteed message delivery for both asynchronous or synchronous communications,
a single development interface for all components, operational manageability and
off-the-shelf, proven technology. Through a solution that combined BEA TUXEDO
and Oracle relational databases. Through a solution that combined BEA TUXEDO and
Oracle relational databases, Damark was able to connect its toll-free call
representatives directly to the prospective customer's information database,
thereby significantly improving overall representative efficiency. In addition,
Damark uses BEA TUXEDO to minimize system downtime, as users are transferred
within 30 seconds from a failed node to another node capable of handling the
requested transaction.
 
                                       40
<PAGE>
   
  PEOPLESOFT
    
 
    PeopleSoft, a leading provider of enterprise software supporting human
resources, financial and manufacturing applications on open systems, needed a
software framework to strengthen its ability to implement applications across
multiple sites and computing environments. PeopleSoft investigated multiple
technologies, including a number of middleware products. PeopleSoft decided to
base PeopleSoft Release 6 and future applications on BEA technology, selecting
BEA TUXEDO because of its request/reply and publish/subscribe messaging
capabilities, and its strengths in handling high-volume transaction processing
with high availability and reliability. By using BEA TUXEDO as its middleware
infrastructure, PeopleSoft is able to deliver multi-tier global applications.
PeopleSoft is making use of the multiple communication capabilities within the
BEA TUXEDO framework based on the need of applications to process transactions
in either a real-time or asynchronous mode. In addition, end users can use BEA
TUXEDO to enable custom applications to interoperate with the packaged
PeopleSoft applications. PeopleSoft 6, the first PeopleSoft release using BEA
TUXEDO, began shipping to customers in December 1996.
 
  UNITED KINGDOM EMPLOYMENT SERVICE
 
   
    In 1996, the United Kingdom Employment Service ("E.S.") determined that it
needed a new software application to support its labor market activities. E.S.'s
existing systems were reaching the end of their product life cycles and did not
have the flexibility to incorporate new technology to enhance functionality.
E.S. selected BEA TUXEDO as the middleware framework for the Labour Market
System ("LMS"), an application designed to replace all existing applications.
LMS now links all 1,067 job centers in Great Britain, using CA-Ingres relational
databases running on Sequent platforms as the core of the system. LMS has become
one of the world's largest distributed systems. Thirty thousand people
throughout E.S. have been trained to use the system, which processes over five
million transactions per day. The integrated system enables immediate searches
and displays of suitable vacancies and opportunities for job seekers, thereby
improving the services that E.S. is able to offer its clients.
    
 
PRODUCTS
 
   
    The BEA Enterprise Transaction Framework is an integrated middleware
software platform for building, deploying and managing distributed
mission-critical applications. The BEA Enterprise Transaction Framework provides
the scalability, manageability, platform independence, interoperability,
integrity, reliability and security requirements of complex, large-scale,
transaction-intensive mission-critical applications in a distributed computing
environment. The core of the BEA Enterprise Transaction Framework is BEA TUXEDO,
a market-proven and time-tested technology first developed at AT&T Bell Labs in
1984. The Company took over development, sales and support of TUXEDO from Novell
in February 1996 and has subsequently shipped BEA TUXEDO Release 6.2, BEA
Connect SNA Version 1.1, BEA Connect TCP Version 1.1, and BEA Jolt Version 1.0.
On January 31, 1997, the Company agreed to acquire exclusive rights to MessageQ,
ObjectBroker and other related products from Digital.
    
 
                                       41
<PAGE>
                    THE BEA ENTERPRISE TRANSACTION FRAMEWORK
 
    Set forth on page   is a horizontal rectangular box bearing the caption "BEA
TUXEDO KERNEL." Set forth on top of this box are four square boxes each with a
caption reading, from left to right, "BEA BUILDER," "BEA CONNECT," "BEA TP BLUE"
and "BEA JOLT." Set forth to the left of the five aforementioned boxes is a
vertical rectangular box of equal height as the combined other boxes, with a
caption reading "BEA MANAGER."
 
  BEA TUXEDO
 
    BEA TUXEDO is a robust engine for developing, deploying and managing
mission-critical applications in distributed computing environments. BEA TUXEDO
provides distributed transaction processing and application messaging
capabilities, as well as the full complement of services necessary to build and
run mission-critical applications. It enables developers to create applications
that interoperate across multiple hardware platforms, databases and operating
systems.
 
    BEA TUXEDO provides mainframe-like performance for distributed
mission-critical applications. It allows these applications to accommodate
thousands of worldwide users, high-transaction throughput, multiple concurrent
database access and large volumes of data, while maintaining short response
times, high data integrity and security and 7x24x365 system availability. At the
same time, BEA TUXEDO enables developers and systems managers to take advantage
of the benefits offered by distributed computing environments, such as lower
incremental technology costs, increased flexibility, faster application
development and deployment and improved access to business information.
 
   
  BEA MESSAGEQ
    
 
   
    BEA MessageQ enables messages to be sent from one application to another
through an advanced queued message bus. Queued messaging allows applications to
communicate without interruption, either synchronously or asynchronously,
through queues or publish-and-subscribe mechanisms. BEA MessageQ ensures that
messages on incoming and outgoing queues are recognized and executed only when
the receiving or sending system is ready for processing. The communicating
programs can be on the same computer or on many different computers in an
enterprise-wide network. The Company has agreed to acquire exclusive rights to
BEA MessageQ from Digital in a transaction scheduled to close on or about March
26, 1997. Any rights of the Company to BEA MessageQ are subject to the
consummation of this transaction, which remains subject to certain closing
conditions.
    
 
                                       42
<PAGE>
   
  BEA OBJECTBROKER
    
 
   
    BEA ObjectBroker is a CORBA-compliant Object Request Broker ("ORB") that
simplifies software integration and the development of new, object-oriented
distributed solutions. BEA ObjectBroker runs on more platforms than any other
ORB and, having first shipped in 1991, is the most mature existing ORB
technology. Throughout its development and ongoing enhancements, BEA
ObjectBroker has focused on high performance and enterprise-level robustness.
BEA ObjectBroker is also subject to the pending Digital transaction, and any
rights of the Company to BEA ObjectBroker are subject to completion of that
transaction, which remains subject to certain closing conditions.
    
 
  BEA JOLT
 
    BEA Jolt extends the capabilities of BEA TUXEDO to the Internet and
intranets, making mission-critical applications immediately accessible through
these media without the need for any additional application programming. It
enables Internet and intranet application developers to take full advantage of
the benefits offered by the BEA Enterprise Transaction Framework and, the
Company believes, provides the means for resolving many of the technical issues
hindering the development of electronic commerce on the Internet. BEA Jolt
ensures that transaction integrity is maintained, notwithstanding the Internet's
inherent inability to retain the current state of any transaction or the
frequently unreliable connections encountered by users. BEA Jolt employs a
Java-based interface that allows programmers to execute service requests from
any Java-enabled web browser without requiring any knowledge of detailed
transaction semantics. BEA Jolt also ensures an application's security, since
neither transactional programming nor semantics are accessible from the Internet
or intranets.
 
  BEA TP BLUE
 
    BEA TP Blue provides mainframe-to-UNIX and mainframe-to-NT application
portability, compatibility and connectivity for CICS-based transaction
processing. With BEA TP Blue, organizations can extend the useful lives of CICS
applications, either by seamlessly sharing the transaction processing load with
UNIX- or NT-based hardware or by migrating applications and data from the
mainframe to a UNIX- or NT-based distributed computing environment. BEA TP Blue
preserves organizations' investments in CICS/COBOL programs and programmers,
while enabling them to take advantage of UNIX- and NT-based technologies.
Programmers can continue to develop and deploy mission-critical applications on
the mainframe using CICS/COBOL and to rely upon BEA TP Blue to connect or
migrate those applications to UNIX and NT whenever necessary.
 
  BEA CONNECT
 
    BEA Connect is a family of connectivity products that allows applications to
extend across heterogeneous hardware and software platforms. Designed to work in
concert with all other BEA products, BEA Connect assures ready, transparent
access to critical information across the network with a single, standard
programming interface. BEA Connect supports a variety of mainframe-based and
distributed transactional technologies, including CICS and IMS, by using
standard network protocols such as TCP/IP, LU6.2/SNA or OSITP. Interfaces can
also be built for connectivity with specific packaged software applications,
such as SAP's R/3. BEA Connect also enables customers to write mission-critical
applications that access remote application services on mainframes or other
hosts via industry-standard communications mechanisms.
 
  BEA BUILDER
 
    BEA Builder enables programmers to use familiar graphical development
environments, such as Visual Basic, Visual C++ and PowerBuilder, in the
development of BEA TUXEDO-based applications. BEA Builder incorporates
application frameworks and code generators that enhance programmers'
productivity, and provides pre-programmed wizards to automate the configuration
and deployment of
 
                                       43
<PAGE>
an application. By leveraging developers' familiarity with popular development
environments and adding the capabilities noted above, BEA Builder reduces the
training and development needed to design and deploy distributed
mission-critical applications using BEA TUXEDO.
 
  BEA MANAGER
 
    The BEA Manager family of products extends the native management
capabilities of BEA TUXEDO by enabling it to integrate with, and take advantage
of the capabilities of, various third-party management frameworks, including
Tivoli's TME 10 NetView, Sun's Solstice and Hewlett-Packard's OpenView. BEA
Manager adds application level instrumentation for performance measurement and
centralized message logging, which together provide increased detection and
isolation capabilities for application faults. BEA Manager also provides a set
of customizable intelligent agents that reduce the human involvement required to
handle routine maintenance and fault correction. Finally, BEA Manager can be
deployed by existing operations staff with little additional training required.
 
   
    To date, the majority of the Company's license revenues have come from the
BEA TUXEDO product. The Company's other products are sold as additional
components of the BEA Enterprise Transaction Framework, often at the time of the
initial BEA TUXEDO license sale. The core BEA TUXEDO product is priced based on
the number of concurrent run-time users and has a U.S. list price of $395 per
user. The additional components of the BEA Enterprise Transaction Framework are
priced and licensed separately. During the fiscal year ended January 31, 1997,
license fees per customer for BEA products generally ranged from $84,000 to $2.6
million and averaged approximately $395,000. Some components of the BEA
Enterprise Transaction Framework, such as BEA Jolt, are priced by server class.
See "Risk Factors--Product Concentration; Dependence on Growth of Market for
Middleware; Novell Relationship."
    
 
TECHNOLOGY
 
    TUXEDO was initially developed in 1983 within AT&T Bell Labs and released in
1984. Release 1.0 enabled an application to be partitioned into a set of
cooperating client and server processes and an application programming interface
("API"). Subsequent releases built on this foundation, incorporating
capabilities to support high levels of system availability, highly secured and
widely distributed clients and servers, interoperability across heterogeneous
platforms, a graphical user interface for administration, transactional control
of heterogeneous databases, implementation of both conversational and queued
communications methodologies, enhanced data integrity and security and an event
broker that supports the publish and subscribe paradigm.
 
    The most recent version of BEA TUXEDO, Release 6.2, conforms with
industry-standard interfaces and protocols. BEA TUXEDO's modular architecture is
centered on the Application Transaction Manager Interface ("ATMI"), which
consists of 30 simple calls and has been adopted by The Open Group as a standard
X/Open API. BEA TUXEDO supports the Open Group's Distributed Computing
Environment Remote Procedure Call ("DCE RPC") interface. BEA TUXEDO's
performance is publicly documented in Transaction Processing Performance Council
("TPC") benchmarks and is used by virtually all hardware and database vendors
publishing audited benchmarks of their platforms.
 
   
    The BEA Enterprise Transaction Framework is a set of inter-related software
technologies that enable the development, deployment and management of
large-scale, mission-critical distributed applications. BEA technologies are
typically used in conjunction with relational database management systems
("RDBMS"). The RDBMS provides a run-time environment for storing and retrieving
data, while BEA provides the application server infrastructure for executing the
business logic. In addition, the pending acquisition of exclusive rights to
MessageQ and ObjectBroker is intended to extend the BEA Enterprise Transaction
Framework's capabilities to include message-oriented middleware-based and
object-oriented programming methodologies. BEA also provides a rich set of
messaging services that enable reliable, efficient communications among
components of a distributed application, as well as
    
 
                                       44
<PAGE>
web-based access to the application services using Java and HTML. BEA
technologies are hardware and operating system independent and are available on
a wide variety of platforms, including Microsoft Windows and Windows NT, all
major versions of UNIX, MVS Open Edition, Tandem NSK and AS/400.
 
  TRANSACTION INTEGRITY AND SECURITY
 
    Transaction integrity and security are fundamental requirements for building
mission-critical applications, particularly in distributed computing
environments where additional burdens are placed on the execution and management
of these applications. BEA TUXEDO, through its transactional kernel, enables the
resolution and execution of distributed application service requests. These
application service requests are implementations of business processes, such as
withdrawals and deposits in a banking application. BEA TUXEDO provides automated
preparation and transmission of the underlying distributed application services
in a real-time manner. It also provides automated propagation of transactions
and security contexts, which enables distributed services to be automatically
invoked without explicit sign-on to each server. BEA TUXEDO also provides
automatic advertisement of available transaction services. This feature is
critical when an application server becomes unavailable, as it prevents an
application from waiting indefinitely for that particular service. The
combination of these capabilities enables applications that incorporate BEA
TUXEDO to achieve mainframe-like transaction integrity and security, while still
taking advantage of the benefits offered by distributed computing environments.
 
  ROBUST MESSAGING--PUBLISH-AND-SUBSCRIBE MODEL
 
    Through the use of the recently developed publish-and-subscribe model, a new
BEA product called the Event Broker allows applications to subscribe to events
about which they are interested. BEA's Event Broker manages these subscriptions
by maintaining a subscription list and managing event posting. The BEA Event
Broker executes subscription actions in which subscriber and publisher maintain
complete anonymity and independence. The Event Broker enables clients and
servers to post events that have occurred and ensures that the appropriate
applications are notified of the occurrence of those events. By combining BEA
TUXEDO asynchronous messaging capability and the Event Broker, network traffic
can be significantly reduced, as applications are only notified of relevant
events. In addition, the complexity associated with incorporating new
applications within a system is simplified by ensuring that existing
applications are notified of updates and that subscription lists and postings
are modified accordingly.
 
    BEA TUXEDO supports five different modes of communication. In addition to
the publish-and-subscribe model, these modes include asynchronous and
synchronous transactions, request/ response, peer-to-peer messaging and reliable
queuing. Each of these can be carried out with or without distributed
transaction semantics and any combination can be utilized within a single
business application. This enables BEA TUXEDO to be utilized as a
message-oriented middleware platform for developing both transactional and
non-transactional distributed applications.
 
   
  MESSAGE QUEUING-ASYNCHRONOUS TRANSFER MODE
    
 
   
    Following the consummation of the pending acquisition of exclusive rights to
the MessageQ technology from Digital, the Enterprise Transaction Framework will
incorporate a high performance, reliable asynchronous queuing infrastructure.
MessageQ provides a powerful, easy-to-use programming paradigm for
application-to-application communication through an advanced queued message bus.
Queued messaging allows applications on different platforms to communicate
without interruption with the operations of any existing systems. Messages on
incoming and outgoing queues are consumed and executed only when the receiving
or sending system is ready for processing. BEA plans to incorporate the BEA
Event Broker technology into BEA MessageQ to provide a complete
    
 
                                       45
<PAGE>
   
publish-and-subscribe programming mechanism on top of a high performance, robust
and reliable queuing platform.
    
 
  OPEN ARCHITECTURE AND PROGRAMMING API
 
   
    The APIs provided with the BEA Enterprise Transaction Framework are built on
a common set of robust kernel services provided by BEA TUXEDO. These services
provide a level of abstraction between the application programs and the
underlying system facilities. They also enable transparent interoperability
between components developed to different APIs. For example, a Java client can
invoke a CICS transaction or an X/Open-compliant XATMI-based service via the
same API call. This support of multiple programming styles also facilitates the
migration of existing applications to distributed computing environments via the
BEA Enterprise Transaction Framework. In addition, ObjectBroker, which the
Company is acquiring from Digital, is an implementation of the Common Object
Request Broker Architecture ("CORBA") as specified by the Object Management
Group ("OMG").
    
 
    BEA products have been designed from the ground up to conform with
industry-standard interfaces and protocols. These include both formal standards,
such as X/Open, DCE and ISO, and de facto standards, such as SNA, the Java
Virtual Machine, OLE and ActiveX. The Company's product development efforts
continuously reflect the knowledge gained from working with customers to build
large-scale, mission-critical distributed applications. An example of the
benefits to the Company of these efforts is the XA implementation within BEA
TUXEDO, which vendors such as Oracle and Microsoft have selected as the
reference platform for their database integration efforts. The Company's
products support all major RDBMS platforms, which, in addition to Oracle and
Microsoft's SQL Server, include Informix, IBM DB2/6000, Sybase and CA/Ingres.
 
  SYSTEMS SERVICES
 
    BEA products provide a robust set of system services that enable distributed
applications to be developed in a standard and consistent manner. These services
include naming, application activation and deactivation, dynamic application
reconfiguration and system fault management. In addition, the Company's products
also provide a set of application level services. These services include
intra-node and inter-node application communication management, application
transaction management, client/ workstation handling, security management,
application queue management and event management. By providing these system and
application level services, the Company's products significantly reduce the
amount of system and application level programming effort required. These
services also enable applications developed within the BEA Enterprise
Transaction Framework to interoperate across heterogeneous computing
environments.
 
  MANAGEMENT INFORMATION BASE
 
    BEA's products enable distributed transaction system monitoring and
management through a Management Information Base ("MIB"). This system monitors
applications, databases, operating systems and networks; it also provides
logging facilities, and event and performance management. The management
information base enables systems administrators to set pre-defined rules or
allows them to monitor and manages systems interactively through an easy-to-use
graphical interface. In addition, BEA provides a Simple Network Management
Protocol ("SNMP") agent kit to allow the use of any SNMP-based management tool,
such as OpenView or TME.
 
  APPLICATION-TO-APPLICATION CONNECTIVITY
 
    Most connectivity products on the market today only provide a low-level
solution, such as connecting a UNIX system running TCP/IP to a mainframe running
SNA. This leaves most of the application-level connectivity programming to the
IT programmers. BEA's products, however, support high-level
application-to-application connectivity for a wide variety of mainframe and
distributed
 
                                       46
<PAGE>
   
systems, relieving programmers of the burden previously associated with systems
level programming efforts. These connectivity technologies support industry-wide
networking standards, such as the OSI/TP protocol for application services or
the IBM LU6.2/SNA protocol. In addition, the Company provides an IBM
syncpoint-enabled transactional connectivity technology for IMS-based or
CICS-based applications. The Company is also currently developing an
IBM-compatible Intersystems Communication ("ISC") protocol-based connectivity
technology for customers who wish to develop mainframe-style applications in a
fully-distributed environment. In addition, MessageQ, which is subject to the
pending acquisition from Digital, employs an advanced queued message bus that
enables applications on different computers to exchange data.
    
 
  INTERNET/INTRANET EXTENSIBILITY
 
    BEA Jolt extends BEA TUXEDO-based applications to the Internet/intranets
without the need for additional application programming. BEA Jolt provides
object-oriented access, from any Java-enabled browser via Java applets, to BEA
TUXEDO-based applications behind an organization's firewall. Legacy mainframe
environments, such as CICS, are similarly accessible using BEA Jolt and BEA
Connect. BEA Jolt simplifies application design by providing object interfaces
for Java, as well as turn-key access to BEA-developed Java class definitions and
customized Java applets residing in the BEA Jolt repository. For ease of
management, the BEA Jolt server can be administered with the same tools used to
manage any resource within the BEA TUXEDO environment.
 
RESEARCH AND DEVELOPMENT
 
    The Company has made substantial investments in technology acquisition and
product development. BEA TUXEDO was originally developed by AT&T Bell Labs, and
had been revised by UNIX System Labs and Novell before BEA became the developer
of the product in February 1996. Important product technology for the BEA
Enterprise Transaction Framework was gained through many of the Company's
acquisitions. The Company will continue to review possible technology
acquisitions when appropriate. See "Risk Factors--Past and Future Acquisitions"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operation."
 
   
    At January 31, 1997, the Company had a development staff of 105, which
included the original four architects, as well as many of the original
developers, of TUXEDO. In addition, along with its pending acquistion of
MessageQ, ObjectBroker and related products from Digital, the Company is to
acquire the services of approximately 90 product development employees and
contractors. In its fiscal years ended January 31, 1996 and 1997, the Company's
product development expenses were $3.2 million and $18.2 million, respectively.
The Company's product development organization is responsible for product
architecture, core technology and functionality, product testing, user interface
development and expanding the ability of BEA's products to operate with the
leading hardware platforms, operating systems, relational database management
systems ("RDBMSs"), application development and management tools and networking
and communication protocols. To date, the Company has not capitalized any
software development costs and does not anticipate capitalizing any software
development costs. The Company expects to continue to devote substantial
resources to its product development activities, including continued support of
existing and emerging hardware platforms, operating systems, RDBMSs, application
development and management tools, and networking and communication protocols.
    
 
    BEA shipped BEA TUXEDO Release 6.1, Vol. 2 in July 1996, BEA Connect SNA
Version 1.1 in August 1996, BEA Connect TCP in November 1996, and BEA TUXEDO 6.2
in December 1996. The Company released the first customer shipment of BEA Jolt
Version 1.0, the first product developed exclusively by BEA, in December 1996.
The Company intends to continue to extend the functionality of BEA TUXEDO and
the BEA Enterprise Transaction Framework, to commit significant resources to the
 
                                       47
<PAGE>
ongoing development of BEA TUXEDO and to support existing and emerging
technologies such as object-oriented technology.
 
    The market for the Company's products is highly fragmented, competitive with
alternative computing architectures, and characterized by continuing
technological development, evolving industry standards and changing customer
requirements. The introduction of products embodying new technologies, the
emergence of new industry standards or changes in customer requirements could
render the Company's existing products obsolete and unmarketable. As a result,
the Company's success depends upon its ability to further enhance existing
products, respond to changing customer requirements, and develop and introduce
in a timely manner new products that keep pace with technological developments
and emerging industry standards. Customer requirements include, but are not
limited to, operability across distributed and changing heterogeneous hardware
platforms, operating systems, relational databases and networks. For example,
although BEA TUXEDO interoperates with applications on over 40 operating
platforms, as certain of the Company's customers start to utilize emerging
platforms, it will be necessary for the Company to further enhance its products
to interoperate with applications on these emerging platforms. There can be no
assurance that the Company's products will adequately address the changing needs
of the marketplace or that the Company will be successful in developing and
marketing enhancements to its existing products or new products incorporating
new technology on a timely basis. Failure to develop and introduce new products,
or enhancements to existing products, in a timely manner in response to changing
market conditions or customer requirements, will materially and adversely affect
the Company's business, operating results and financial condition.
 
SALES, MARKETING AND SERVICES
 
    The Company's sales strategy is to pursue opportunities worldwide within
large organizations through its direct sales, professional services and
technical support organizations, complemented by indirect sales channels such as
hardware OEMs, packaged application software developers, systems integrators and
independent consultants, software tool vendors and distributors. The Company
currently intends to add to its direct sales, support and professional services
organizations in all major markets worldwide.
 
  DIRECT SALES ORGANIZATION
 
   
    BEA markets its software and services primarily through its direct sales
organization. As of January 31, 1997, the Company's direct sales force totaled
87 sales representatives in 26 offices worldwide. At January 31, 1997, the
direct sales force was supported by 26 technical sales engineers worldwide.
Field sales representatives are assigned quotas and compensated for all Company
revenues, both direct and indirect, resulting from their assigned territory.
Leads are generally qualified by a third party and then passed through the field
sales organization.
    
 
    The Company typically uses a consultative, solution-oriented sales model
that entails the collaboration of technical and sales personnel to formulate
proposals to address specific customer requirements. Because the Company's
products are typically used to integrate applications that are critical to a
customer's business, the Company focuses its initial sales efforts on senior IT
department personnel who are responsible for such applications. Subsequent
efforts often include other senior members of a customer's executive management
team.
 
  PRODUCT SALES AND IMPLEMENTATION CYCLE
 
    The license of the Company's software products is often an enterprise-wide
decision by prospective customers and requires the Company to engage in a
lengthy sales cycle to provide a significant level of education to prospective
customers regarding the use and benefits of the Company's products. The
Company's sales process consists of several phases: lead generation, initial
contact, lead qualification,
 
                                       48
<PAGE>
needs assessment, proposal generation and contract negotiation. Following the
signing of a license contract for BEA products, a customer's implementation
consists of a pre-deployment and a deployment phase. Approximately 10 to 30
percent of the revenue from a typical customer is realized during the
pre-deployment phase and is usually weighted toward professional services and
training. The remaining portion of revenue is realized during the deployment
stage and predominantly consists of license fees. While the sales and
implementation cycle varies substantially from customer to customer, for initial
sales it has ranged from 18 to 24 months from the initial contact to the
completion of the deployment phase. In many cases, a customer begins a second
development project using BEA products, often with substantially shortened
development and deployment timeframes. Additional development projects by a
particular customer are often implemented in progressively abbreviated
timeframes. See "Risk Factors--Lengthy Sales and Implementation Cycle."
 
  STRATEGIC RELATIONSHIPS
 
    An important element of the Company's sales and marketing strategy is to
expand its relationships with third parties to increase the market awareness,
demand and acceptance of BEA and its products. The Company often benefits from
third-party selling assistance and believes that, in a number of instances, its
relationships with strategic partners have substantially shortened the Company's
sales cycle. Partners have often generated and qualified sales leads, made
initial customer contacts, assessed needs and recommended contact with the
Company prior to BEA's introduction. Partners can provide customers with
additional resources and expertise, especially in vertical markets, to help meet
their system application development requirements. Types of partners include:
 
   
    HARDWARE OEMS.  BEA's hardware partners often act as resellers of BEA
TUXEDO, either under the BEA TUXEDO name or integrated with their own software
products, or recommend BEA TUXEDO to their customers and prospects who are
planning to implement high-end, mission-critical applications on their hardware
platform. BEA's relationships with hardware manufacturers include Digital
Equipment Corp., Fujitsu Limited, Hewlett-Packard Corporation, IBM Corporation,
NEC Corporation, Pyramid Technology Corp., Sequent Computer Systems Inc.,
Siemens-Nixdorf Informationssysteme A.G., Sun Microsystems Inc., Unisys and
Tandem Computers Inc.
    
 
    PACKAGED APPLICATION SOFTWARE DEVELOPERS.  BEA licenses its software to
packaged application software vendors. These vendors embed the software as a
middleware infrastructure for the applications they supply, giving these
applications increased distribution, scalability and portability across all
platforms on which BEA TUXEDO runs. Customers can also easily integrate custom
applications built using BEA TUXEDO into these existing packaged applications.
Vendors that embed BEA TUXEDO software in their packaged applications include
CableData, Clarify, Inc., Cycare Systems, Inc., Filoli Information Systems and
PeopleSoft Inc.
 
    SYSTEMS INTEGRATORS AND INDEPENDENT CONSULTANTS.  Systems integrators often
refer their customers to BEA and may utilize BEA as a subcontractor in some
situations. BEA TUXEDO has been designated by EDS as a certified framework
product, and BEA seeks similar certification from other systems integrators. BEA
also works cooperatively with independent consulting organizations, often being
referred to prospective customers by professional services organizations with
expertise in high-end transactional applications. In addition to EDS, BEA has
relationships with systems integrators such as Andersen Consulting, Oracle
Consulting and Perot Systems Corporation, as well as many independent
consultants.
 
   
    INDEPENDENT SOFTWARE TOOL VENDORS.  Partner ISVs integrate their tools with
BEA TUXEDO to enable their customers to use these tools to build scalable
distributed applications more easily. BEA has relationships with over 40 tool
vendors, including Borland International Inc., BMC Software Inc., Compuware
Corporation, Dynasty, Mercury Interactive Corporation, Microsoft Corporation,
NAT Systems International, Inc., Oracle Corporation, Passport Communications,
Inc. and Prolifics.
    
 
                                       49
<PAGE>
   
    DISTRIBUTORS.  The Company uses distributors to sell its products in North
America and major markets in Europe, Asia and Latin America to augment the
efforts of its direct sales force. As of January 31, 1997, the Company was
represented by 13 distributors.
    
 
  PROFESSIONAL SERVICES
 
   
    The Company's professional services organization provides a full range of
consulting services to customers developing, deploying and managing
mission-critical applications using BEA products. These services include
architectural assistance, prototyping, implementation, legacy migration,
porting, application integration, performance evaluation and tuning, and data
conversions. Because of the complex nature of its customers' mission-critical
applications, the Company believes that its professional services organization
plays a key role in facilitating initial license sales and enabling customers to
successfully develop, deploy and manage such applications. As of January 31,
1997, the Company employed 73 professional services consultants. Fees for
professional services are generally charged on a time and materials basis and
vary depending upon the nature and extent of services to be performed.
    
 
  TECHNICAL SUPPORT
 
    The Company believes that a high level of customer support is integral to
the successful marketing and sale of BEA products. Mission-critical applications
require rapid support response and problem resolution. The Company's direct
sales to customers include a basic level of maintenance. Comprehensive 7x24x365
support contracts are also available, typically on an annual basis. In addition,
the Company offers introductory and advanced classes and training programs at
the Company's offices, customer sites and training centers worldwide. Telephone
hotline support is offered worldwide at either a standard or around-the-clock
level, depending on customer requirements. The Company maintains product and
technology experts on call at all times worldwide and has support call centers
located in Sunnyvale, California and Paris, France. The Company sponsors user
group conferences in North America and Europe.
 
  MARKETING
 
    The Company's marketing efforts are directed at broadening the market for
BEA TUXEDO and the BEA Enterprise Transaction Framework by increasing awareness
of the benefits of using the Company's products to build mission-critical
distributed applications. Marketing efforts are also aimed at supporting the
Company's worldwide direct and indirect sales channels. Marketing personnel
engage in a variety of activities including conducting public relations and
product seminars, issuing newsletters, sending direct mailings, preparing sales
collateral and other marketing materials, coordinating the Company's
participation in industry trade shows, programs and forums, and establishing and
maintaining close relationships with recognized industry analysts. The Company's
senior executives are frequent speakers at industry forums in many of the major
markets the Company serves.
 
COMPETITION
 
    The market for middleware software and related services is highly
competitive. The Company's competitors are diverse and offer a variety of
solutions directed at various segments of the middleware software marketplace.
These competitors include database vendors such as Oracle Corporation
("Oracle"), IBM Corporation ("IBM") and others, which offer their own
development tools for use with their proprietary databases, as well as companies
offering and developing middleware software products and related services or
application development tools that compete with products offered by the Company.
In addition, internal development groups within prospective customers'
organizations may develop software and hardware systems that may substitute for
those offered by the Company. A number of the Company's competitors and
potential competitors have longer operating histories,
 
                                       50
<PAGE>
significantly greater financial, technical, marketing and other resources,
greater name recognition and a larger installed base of customers than the
Company.
 
    The Company's principal competitors currently are database vendors that
advocate client/server networks driven by the database server and software tool
vendors that offer development tools designed to enable customers to create
distributed mission-critical applications. Oracle is the primary relational
database vendor offering products that are intended to serve as alternatives to
the Company's enterprise middleware solutions. Currently, the software
development tool vendors typically emphasize the broad versatility of their
toolsets and, in some cases, offer complementary middleware software that
supports these tools and performs messaging and other basic middleware
functions. There can be no assurance that the Company will compete successfully
with database vendors and software tool vendors, or that the products offered by
such vendors will not achieve greater market acceptance than the Company's
products.
 
    Microsoft has announced that it will provide middleware functionality in
future versions of its Windows NT operating system and has recently announced
the release of a product that includes certain middleware functionality. The
bundling of middleware functionality in Windows NT will require the Company to
compete with Microsoft in the Windows NT marketplace, where Microsoft will have
certain inherent advantages due to its significantly greater financial,
technical, marketing and other resources, greater name recognition, its
substantial installed base and the integration of its enterprise middleware
functionality with Windows NT. If Microsoft successfully incorporates middleware
functionality into Windows NT or separately offers middleware applications, the
Company will need to differentiate its products based on functionality,
interoperability with non-Microsoft platforms, performance and reliability and
establish its products as more effective solutions to customers' needs. There
can be no assurance that the Company will be able to successfully differentiate
its products from those offered by Microsoft, or that Microsoft's entry into the
middleware market will not materially adversely affect the Company's business,
operating results and financial condition.
 
    In addition, current and potential competitors may make strategic
acquisitions or establish cooperative relationships among themselves or with
third parties, thereby increasing the ability of their products to address the
needs of the Company's current and prospective customers. Accordingly, it is
possible that new competitors or alliances among current and new competitors may
emerge and rapidly gain significant market share. Such competition could
materially adversely affect the Company's ability to sell additional licenses
and maintenance and support renewals on terms favorable to the Company. Further,
competitive pressures could require the Company to reduce the price of its
products and related services, which could materially adversely affect the
Company's business, operating results and financial condition. There can be no
assurance that the Company will be able to compete successfully against current
and future competitors, and the failure to do so would have a material adverse
effect upon the Company's business, operating results and financial condition.
 
    The Company believes that the principal competitive factors in the market
for its products are the ability to scale to accommodate a large number of
users, interoperability with major hardware and software platforms and legacy
systems, cost, time to implementation, robustness and support services. Based on
these factors, the Company believes its products compete favorably, although
there can be no assurance that the Company can maintain its competitive position
against current and potential competitors.
 
    In order to be successful in the future, the Company must continue to
respond promptly and effectively to the challenges of technological change and
competitors' innovations. There can be no assurance that the Company will be
able to compete successfully with existing or new competitors or that
competition will not have a material adverse effect on the Company's business,
financial condition and results of operations.
 
                                       51
<PAGE>
INTELLECTUAL PROPERTY
 
   
    The Company's success depends upon its proprietary technology. The Company
relies on a combination of copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
its proprietary rights. The Company presently has three issued patents and two
pending patent applications, as well as an exclusive license to one patent and
one pending patent application. In addition, as part of its pending acquisition
of products from Digital, the Company will acquire an exclusive license to an
additional U.S. patent and two pending U.S. patent applications. No assurance
can be given that competitors will not successfully challenge the validity or
scope of the Company's patents and that such patents will provide a competitive
advantage to the Company. As part of its confidentiality procedures, the Company
generally enters into non-disclosure agreements with its employees, distributors
and corporate partners, and license agreements with respect to its software,
documentation and other proprietary information. Despite these precautions, it
may be possible for a third party to copy or otherwise obtain and use the
Company's products or technology without authorization, or to develop similar
technology independently. In particular, the Company has, in the past, provided
certain hardware OEMs with access to its source code, and any unauthorized
publication or proliferation of this source code could materially adversely
affect the Company's business, operating results and financial condition.
Policing unauthorized use of the Company's products is difficult and, although
the Company is unable to determine the extent to which piracy of its software
products exists, software piracy can be expected to be a persistent problem.
Effective protection of intellectual property rights is unavailable or limited
in certain foreign countries. There can be no assurance that the Company's
protection of its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar technology, duplicate the
Company's products or design around any patents issued to the Company or other
intellectual property rights of the Company.
    
 
    The Company is not aware that any of its products infringe the proprietary
rights of third parties. There can be no assurance, however, that third parties
will not claim such infringement by the Company with respect to current or
future products. The Company expects that software product developers will
increasingly be subject to such claims as the number of products and competitors
in the Company's industry segment grows and the functionality of products in the
industry segment overlaps. Any such claims, with or without merit, could result
in costly litigation that could absorb significant management time, which could
have a material adverse effect on the Company's business, operating results and
financial condition. Such claims might require the Company to enter into royalty
or license agreements. Such royalty or license agreements, if required, may not
be available on terms acceptable to the Company or at all, which could have a
material adverse effect upon the Company's business, operating results and
financial condition.
 
EMPLOYEES
 
   
    At January 31, 1997, the Company had 459 full-time employees of whom 105
were primarily engaged in research and development, 313 in consulting, training,
sales, support and marketing and 41 in administration and finance. In addition,
as part of its pending acquisition of products from Digital, the Company will
acquire the services of approximately 90 associated product development
employees and contractors. None of the Company's employees is represented by a
collective bargaining agreement and the Company has never experienced any work
stoppage. The Company considers its relations with its employees to be good. The
Company also employs a number of temporary and contract employees from time to
time. At January 31, 1997, the Company employed approximately 58 temporary and
contract employees.
    
 
    The Company's future performance depends to a significant degree upon the
continued service of its key members of management, as well as key marketing,
sales, consulting and product development personnel. The loss of any of William
T. Coleman III, the Company's President, Chairman and Chief
 
                                       52
<PAGE>
Executive Officer, Edward W. Scott, Jr., the Company's Executive Vice President
of Worldwide Field Operations, or Alfred S. Chuang, the Company's Chief
Technical Officer and Executive Vice President of Product Development, or one or
more of the Company's other key personnel, would have a material adverse effect
on the Company's business, operating results and financial condition. The
Company believes its future success will also depend in large part upon its
ability to attract and retain highly skilled management, marketing, sales,
consulting and product development personnel. Competition for such personnel is
intense, and there can be no assurance that the Company can retain its key
employees or that it will be successful in attracting, assimilating and
retaining such personnel in the future. Hiring of qualified technical personnel
in foreign countries will be difficult due to a more limited number of qualified
professionals, as the Company seeks to expand its worldwide support
organization. Failure to attract, assimilate and retain key personnel would have
a material adverse effect on the Company's business, operating results and
financial condition. In addition, the Novell Agreement requires the Company to
employ a minimum number of research and development personnel.
 
FACILITIES
 
   
    The Company's primary offices are located in approximately 38,000 and 18,000
square feet of space in Sunnyvale, California and approximately 61,000 square
feet in Bernards Township, New Jersey under leases expiring in January 31, 2001,
June 30, 1998 and April 31, 2006, respectively. The Company has an option to
extend the lease of the premises in Sunnyvale for an additional five years after
the original expiration date on substantially the same terms. The Company also
leases space for its sales and support offices in Atlanta, Georgia; Boston,
Massachusetts; Brisbane, Australia; CapeTown, South Africa; Dallas, Texas;
Escondido, California; Espoo, Finland; Golden, Colorado; Johannesburg, South
Africa; Kowloon, Hong Kong; London, England; Melbourne, Australia; Minneapolis,
Minnesota; Munich, Germany; Paris, France; Reston, Virginia; San Francisco,
California; Sao Paulo, Brazil; Schaumberg, Illinois; Sydney, Australia; Toronto,
Canada; Yokohama, Japan, Zaventem, Belgium and Zurich, Switzerland. BEA also has
offices in Seoul, Korea and Stockholm, Sweden, which are leased by other
companies. The Company believes that its existing facilities are sufficient to
meet its anticipated needs for the foreseeable future.
    
 
                                       53
<PAGE>
                                   MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
 
   
    The following table sets forth certain information concerning the executive
officers and directors of the Company as of February 28, 1997:
    
 
<TABLE>
<CAPTION>
NAME                            AGE                                        POSITION(S)
- --------------------------  -----------  --------------------------------------------------------------------------------
<S>                         <C>          <C>
William T. Coleman III              49   President, Chief Executive Officer, Chairman of the Board and Director
 
Edward W. Scott, Jr.                58   Executive Vice President of Worldwide Field Operations, Assistant Secretary and
                                           Director
 
Alfred S. Chuang                    35   Chief Technical Officer, Executive Vice President of Product Development
 
Steve L. Brown                      43   Executive Vice President, Chief Financial Officer and Secretary
 
Carol Bartz(1)                      48   Director
 
Cary J. Davis                       30   Director
 
Stewart K.P. Gross(2)               37   Director
 
William H. Janeway(1)               53   Director
 
Dean Morton(2)                      64   Director
</TABLE>
 
- --------------
 
(1) Member of Compensation Committee.
 
(2) Member of Audit Committee.
 
    MR. COLEMAN was a founder of the Company and has been its President, Chief
Executive Officer and a member of its Board of Directors since the Company's
inception. Prior to founding the Company in January 1995, Mr. Coleman was
employed by Sun Microsystems, Inc. from 1985 to January 1995, where his last
position was Vice President and General Manager of its Sun Integration division.
Mr. Coleman holds a B.S. from the Air Force Academy and an M.S. from Stanford
University.
 
    MR. SCOTT is a founder of the Company and has been a member of its Board of
Directors and its Executive Vice President of Worldwide Field Operations since
the Company's inception. Prior to founding the Company in January 1995, Mr.
Scott was employed by Pyramid Technology, Inc. as its Executive Vice President
of Worldwide Sales and Marketing from September 1988 to April 1995 and by Sun
Microsystems from October 1985 to September 1988. Mr. Scott has a B.A. and an
M.A. from Michigan State University and a Bachelor's Degree from Oxford
University.
 
    MR. CHUANG is a founder of the Company and has been its Chief Technical
Officer and Executive Vice President of Product Development since the Company's
inception. He served as a member of its Board of Directors from the Company's
inception until September 1995. From 1986 to December 1994, Mr. Chuang worked at
Sun Microsystems, Inc. in various positions, including Chief Technology Officer
of Sun Integration Services and Corporate Director of Strategic Systems
Development of Sun's Middleware Group. Mr. Chuang has a B.S. from the University
of San Francisco and an M.S. from U.C. Davis.
 
    MR. BROWN joined the Company in August 1996 and is currently Executive Vice
President, Chief Financial Officer and Secretary. From October 1994 to July
1996, Mr. Brown was employed by MicroUnity Systems Engineering, Inc., where his
last position was Vice President, Finance. From 1978 to 1994, Mr. Brown was
employed at the Hewlett-Packard Corporation in various controller and treasury
positions. He holds a B.A. from San Diego State University and an M.B.A. from
UCLA.
 
                                       54
<PAGE>
    MS. BARTZ has served as a director of the Company since November 1995. From
April 1992 to present, Ms. Bartz has served as the Chairman and Chief Executive
Officer of Autodesk, Inc. From 1983 to April 1992, Ms. Bartz served in various
positions with Sun Microsystems, Inc., most recently as Vice President of
Worldwide Field Operations. Ms. Bartz is a director of Autodesk, Inc., AirTouch
Communications, Cadence Design Systems, Inc., Cisco Systems, Inc. and Network
Appliance, Inc. Ms. Bartz holds a B.S. from the University of Wisconsin at
Madison.
 
    MR. DAVIS has served as a director of the Company since November 1995. Mr.
Davis is a Vice President of Warburg, Pincus Ventures, LLC, the venture capital
subsidiary of E.M. Warburg, Pincus & Company, LLC, ("EMWP") where he has been
employed since October 1994. From August 1992 to September 1994, Mr. Davis was
employed by Dell Computer Corporation, where his last position was Manager of
Worldwide Desktop Marketing. Mr. Davis holds a B.A. from Yale University and an
M.B.A. from Harvard University.
 
    MR. GROSS has served as a director of the Company since inception. Mr. Gross
is a Managing Director of EMWP and has been employed by EMWP since 1987. Prior
to joining EMWP, Mr. Gross was employed at Morgan Stanley & Co. Mr. Gross is a
director of Vanstar Corporation, OpenVision Technologies, Inc. and several
privately-held companies. Mr. Gross has a B.A. from Harvard University and an
M.B.A. from Columbia University.
 
    MR. JANEWAY has served as a director of the Company since inception. Mr.
Janeway has been a Managing Director of EMWP since July 1988. Prior to joining
EMWP, Mr. Janeway was the Vice President and Director of Corporate Finance at F.
Eberstadt & Co., Inc. from 1979 to July 1988. Mr. Janeway is a director of
ECSoft Group plc, Industri-Matematik Corp., Maxis, Inc., OpenVision
Technologies, Inc., Vanstar Corporation, Zilog, Inc. and several privately-held
companies. Mr. Janeway has a B.A. from Princeton University and a Ph.D. from
Cambridge University, where he studied as a Marshall Scholar.
 
    MR. MORTON has served as a director of the Company since March 1996. Mr.
Morton was Executive Vice President, Chief Operating Officer and a Director of
the Hewlett-Packard Corporation until his retirement in October 1992, where he
held various positions since 1960. Mr. Morton is a director of ALZA Corporation,
Raychem Corporation, Tencor Instruments, The Clorox Company, Centigram
Communications Corporation, and Kaiser Foundation Health Plan, Inc. Hospitals.
He is a trustee of the State Street Research Group of Funds, The State Street
Research Portfolios, Inc. and The Metropolitan Series Fund. Mr. Morton holds a
B.S. from Kansas State University and an M.B.A. from Harvard University.
 
   
    Currently all directors hold office until the next annual meeting of
stockholders or until their successors are duly qualified. Upon completion of
the offering, the Amended and Restated Certificate of Incorporation of the
Company will provide for the Board of Directors to be divided into three
classes, each with staggered three-year terms. As a result, only one class of
directors will be elected at each annual meeting of stockholders of the Company,
with the other classes continuing for the remainder of their respective
three-year terms. Upon the division of the Board of Directors into three
classes, in the absence of cumulative voting rights, the Company's stockholders
holding a majority of the shares of Common Stock outstanding will be able to
elect all the directors. See "Description of Capital Stock-- Antitakeover
Effects of Provisions of the Company's Charter and Bylaws" and "Risk
Factors--Control by Management and Current Stockholders."
    
 
    Officers are elected by and serve at the discretion of the Board of
Directors. There are no family relationships among the directors or officers of
the Company.
 
BOARD COMMITTEES
 
    AUDIT COMMITTEE.  The Audit Committee of the Board of Directors reviews the
results and scope of the annual audit and other services provided by the
Company's independent accountants, reviews and
 
                                       55
<PAGE>
evaluates the Company's internal audit and control functions, and monitors
transactions between the Company and its employees, officers and directors.
Stewart K.P. Gross and Dean Morton serve as members of the Audit Committee.
 
    COMPENSATION COMMITTEE.  The Compensation Committee of the Board of
Directors administers the 1997 Stock Incentive Plan, the 1997 Employee Stock
Purchase Plan and the 1995 Flexible Stock Incentive Plan, and reviews and
approves the compensation and benefits for the Company's executive officers.
Carol Bartz and William H. Janeway serve as members of the Compensation
Committee.
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
    No interlocking relationship exists between any member of the Company's
Board of Directors or Compensation Committee and any member of the board of
directors or compensation committee of any other company, nor has any such
interlocking relationship existed in the past.
 
DIRECTOR COMPENSATION
 
   
    The Company's outside directors are reimbursed for expenses incurred in
connection with attending Board and Committee meetings but are not compensated
for their services as Board members. The Company may also grant to directors
options to purchase Common Stock of the Company pursuant to the terms of the
1997 Stock Incentive Plan and they are eligible to receive bonuses under the
1997 Management Bonus Plan. See "--Stock Plans--1997 Stock Incentive Plan
and--1997 Management Bonus Plan."
    
 
EXECUTIVE COMPENSATION
 
   
    The following table sets forth certain information concerning compensation
of the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers of the Company whose aggregate cash compensation
exceeded $100,000 during the fiscal year ended January 31, 1997 (collectively,
the "Named Executive Officers").
    
 
                           SUMMARY COMPENSATION TABLE
 
   
<TABLE>
<CAPTION>
                                                                                     ANNUAL COMPENSATION
                                                                         --------------------------------------------
                                                                                                     OTHER ANNUAL
NAME AND PRINCIPAL POSITION                                     YEAR     SALARY($)   BONUS($)     COMPENSATION($)(1)
- ------------------------------------------------------------  ---------  ---------  -----------  --------------------
<S>                                                           <C>        <C>        <C>          <C>
William T. Coleman III .....................................       1997    177,923(2)     33,255          --
  President, Chief Executive Officer, Chairman of the Board        1996    152,885      --                22,500
  and Director
Edward W. Scott, Jr. .......................................       1997    150,000      22,170            --
  Executive Vice President and Director                            1996     91,154      --                --
Alfred S. Chuang ...........................................       1997    150,000      22,170            --
  Executive Vice President                                         1996    109,654      --                16,500
</TABLE>
    
 
- --------------
   
(1) Represents contributions made by the Company to the named individual's
    self-employed retirement benefits plan. The named individuals became
    ineligible to continue participating in these plans in January 1996 when the
    Company qualified to adopt a 401(k) plan, and the Company does not
    anticipate making contributions to these plans in future periods.
    
 
   
(2) Mr. Coleman's salary paid in the fiscal year ended January 31, 1997
    represents a yearly salary of $180,000 less unpaid time off in the amount of
    $2,077.
    
 
EMPLOYMENT AGREEMENTS
 
    The Company has entered into employment agreements with William T. Coleman,
Edward W. Scott, Jr. and Alfred S. Chuang (the "Employees"), dated September 28,
1995 (the "Employment Agreements").
 
                                       56
<PAGE>
    The Employment Agreements provide that Mr. Coleman, Mr. Scott and Mr. Chuang
receive a yearly salary of $180,000, $150,000 and $150,000, respectively (to be
reviewed annually), and reimbursement for certain expenses. The Employees are
also entitled to participate in any pension, bonus, insurance, savings or other
employee benefit plans adopted by the Company.
 
    The Employment Agreements continue until the earlier of (1) September 28,
1999 or (2) termination of employment (i) by the Board of Directors for cause at
any time upon 10 days' written notice, or without cause upon 24 hours' written
notice; (ii) by death; (iii) by the Employee for good reason or following
certain corporate transactions, or at will upon two weeks' notice; or (iv) due
to disability. Upon termination of employment without cause by the Company, or
for good reason by the Employee, the Company will hire the Employee as a
consultant until the end of the period of employment, or for a period of two
years following termination. During the Consultancy Period (as defined in the
Employment Agreements), the Employee is required to be available a maximum of 40
hours per week in return for which he will be entitled to receive a monthly
salary, bonus and benefits equal to the amount that he received immediately
prior to the termination of employment. Upon termination of employment for cause
by the Company, or at will by the Employee, the Company can require the Employee
to provide consulting services for a maximum of 40 hours per week until the end
of the period of employment, during which period the Employee will be paid his
monthly salary on a prorated basis. Upon termination by death or disability, the
Employee or his estate will under certain circumstances receive the Employee's
salary and certain other benefits until the end of the period of employment.
 
    The Employment Agreements contain a covenant not to compete which provides
that during the Consultancy Period, under certain circumstances the Employee
cannot compete with the Company, or accept employment with a competitor of the
Company.
 
   
  1997 MANAGEMENT BONUS PLAN
    
 
   
    In January 1997, the Board approved the 1997 Management Bonus Plan (the
"Bonus Plan") pursuant to the terms of which the Company's officers and a number
of key employees, such as managers and architects, are eligible to receive
bonuses of up to 100% of their current base salary, subject to length of
employment and certain other conditions. The bonus level is determined on a
quarterly basis based upon achievement of specified revenue and contribution
performance objectives.
    
 
STOCK PLANS
 
  1995 FLEXIBLE STOCK INCENTIVE PLAN
 
   
    The Company's 1995 Flexible Stock Incentive Plan (the "1995 Incentive Plan")
was adopted by the Board of Directors and approved by the Company's stockholders
in September 1995. The 1995 Incentive Plan provides for the granting to
employees of the Company and of its subsidiaries of incentive stock options
within the meaning of Section 422A of the Internal Revenue Code of 1986, as
amended (the "Code"), and for the granting to employees, outside directors,
consultants, and independent contractors of nonstatutory stock options. In
addition, the 1995 Incentive Plan provides for the sale or grant of restricted
Common Stock to eligible individuals in connection with the performance of
services for the Company. The Board of Directors and the stockholders have
authorized a total of 9,600,000 shares of Common Stock for issuance pursuant to
the 1995 Incentive Plan of which options to purchase 6,829,207 shares of Common
Stock were outstanding as of February 28, 1997, and 2,152,301 shares of Common
Stock remained available for grant.
    
 
    The 1995 Incentive Plan may be administered by the Board of Directors or a
committee of the Board (the "Committee"). The Committee has the power to
determine the terms of the options granted, including the exercise price, number
of shares subject to the option and the exercisability thereof, and the form of
consideration payable upon exercise. Options granted under the 1995 Incentive
Plan are not transferable by the optionee other than by will or the laws of
descent or distribution, and each option is exercisable during the lifetime of
the optionee only by such optionee. The exercise price of all incentive
 
                                       57
<PAGE>
stock options granted under the 1995 Incentive Plan must be at least equal to
the fair market value of the Common Stock on the date of grant. The exercise
price of all nonstatutory stock options granted under the 1995 Incentive Plan
must be at least 85% of the fair market value of the Common Stock on the date of
grant. With respect to any participant who owns stock representing more than 10%
of the combined voting power of the Company or certain affiliated entities (a
"10% Stockholder"), the exercise price of any incentive stock option granted
must equal at least 110% of the fair market value on the grant date. The term of
incentive stock options granted under the 1995 Incentive Plan may not exceed ten
years (or five years in the case of an incentive stock option granted to a 10%
Stockholder). No stock option granted under the 1995 Incentive Plan shall vest
at a rate of less than 20% per year over 5 years from the date the option is
granted. The consideration for exercising any option must consist of cash unless
the Board, in its sole discretion, permits payment by check, Company shares, a
promissory note or the assignment of part of the proceeds of the shares acquired
upon exercise of the options.
 
   
    With certain exceptions, the options terminate upon termination of
employment, disability or death of the employee. In the event of a merger with
or into another corporation, the options will terminate upon the consummation of
a merger, unless assumed or substituted by a successor corporation or its parent
company.
    
 
   
    Upon the completion of this offering, the Company will no longer make awards
under the 1995 Incentive Plan.
    
 
  1997 STOCK INCENTIVE PLAN
 
   
    The Company's 1997 Stock Incentive Plan (the "1997 Stock Incentive Plan")
was adopted by the Board of Directors in March 1997 and is anticipated to be
approved by the Company's stockholders prior to consummation of the offering.
The purpose of the 1997 Stock Incentive Plan is to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to employees, directors and consultants of the Company and
its subsidiaries and to promote the success of the Company's business. The 1997
Stock Incentive Plan provides for the granting to employees of incentive stock
options within the meaning of Section 422 of the Code and the granting of
nonstatutory stock options, stock appreciation rights, dividend equivalent
rights, restricted stock, performance units, performance shares, and other
equity-based rights ("Awards") to employees, directors and consultants of the
Company. Initially, 5,100,000 shares of Common Stock are reserved for issuance
under the plan. Commencing January 2, 1998, the number of shares of Common Stock
reserved for issuance under the 1997 Stock Incentive Plan will be increased by a
number equal to three and one half percent (3.5%) of the number of shares of
Common Stock outstanding as of December 31 of the immediately preceding calendar
year, provided that the number of shares of Common Stock available for grant of
incentive stock options shall be 5,100,000 shares, and such number shall not be
subject to adjustment as described above. The Board of Directors determined the
number of shares to include in the 1997 Stock Incentive Plan based in part on
the number of shares remaining in the 1995 Incentive Plan, which will not be
granted. Where the Award agreement permits the exercise or purchase of the Award
for a certain period of time following the recipient's termination of service
with the Company, disability, or death, the Award will terminate to the extent
not exercised or purchased on the last day of the specified period or the last
day of the original term of the Award, whichever occurs first. To date, no
Awards have been granted under the 1997 Stock Incentive Plan.
    
 
    With respect to Awards granted to directors or officers, the 1997 Stock
Incentive Plan is administered by the Board of Directors or a committee
designated by the Board of Directors constituted to permit such Awards to be
exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, in
accordance with Rule 16b-3 thereunder. With respect to Awards granted to other
participants, the 1997 Stock Incentive Plan is administered by the Board of
Directors or a committee designated by the Board of Directors. In each case, the
Board of Directors or such committees (the "Plan Administrator") shall determine
the provisions, terms and conditions of each Award, including, but not limited
to, the Award vesting schedule, repurchase provisions, rights of first refusal,
forfeiture provisions,
 
                                       58
<PAGE>
form of payment (cash, shares of Common Stock, or other consideration) upon
settlement of the Award, payment contingencies and satisfaction of any
performance criteria. Incentive stock options are not transferable by the
optionee other than by will or the laws of descent or distribution, and each
incentive stock option is exercisable during the lifetime of the optionee only
by such optionee. Other Awards shall be transferable to the extent provided in
the agreement evidencing the Award. The exercise price of incentive stock
options must be at least equal to the fair market value of the Common Stock on
the date of grant, and the term of the option must not exceed ten years. The
term of other Awards will be determined by the Plan Administrator. With respect
to an employee who owns stock possessing more than 10% of the voting power of
all classes of the Company's outstanding capital stock, the exercise price of
any incentive stock option must equal at least 110% of the fair market value of
the Common Stock on the grant date and the term of the option must not exceed
five years. The exercise or purchase price of other Awards will be such price as
determined by the Plan Administrator. The consideration to be paid for the
shares of Common Stock upon exercise or purchase of an Award will be determined
by the Plan Administrator and may include cash, check, shares of Common Stock, a
promissory note, or the assignment of part of the proceeds from the sale of
shares acquired upon exercise or purchase of the Award.
 
   
    In the event of an acquisition of the Company through the sale of all or
substantially all of its assets, a merger or other business combination in which
the Company is not the surviving entity, outstanding Awards under the 1997 Stock
Incentive Plan, except as otherwise provided in a specific Award Agreement,
terminates unless assumed by the successor company or its parent.
    
 
    Unless terminated sooner, the 1997 Stock Incentive Plan will terminate
automatically in 2007. The Board has the authority to amend, suspend or
terminate the 1997 Stock Incentive Plan subject to stockholder approval of
certain amendments and provided no such action may affect Awards previously
granted under the 1997 Stock Incentive Plan.
 
  1997 EMPLOYEE STOCK PURCHASE PLAN
 
   
    The Company's 1997 Employee Stock Purchase Plan (the "Stock Purchase Plan"),
which was approved by the Board of Directors in March 1997 and is anticipated to
be approved by the Company's stockholders prior to the consummation of the
offering, is intended to qualify as an "employee stock purchase plan" under
Section 423 of the Code and to provide employees of the Company with an
opportunity to purchase Common Stock through payroll deductions. An aggregate of
1,250,000 shares of the Company's Common Stock are reserved for issuance under
the Stock Purchase Plan and available for purchase thereunder, subject to
adjustment in the event of a stock split, stock dividend or other similar change
in the Common Stock or the capital structure of the Company. All employees of
the Company and its subsidiaries (including officers) whose customary employment
is for more than five months in any calendar year and more than 20 hours per
week are eligible to participate in the Stock Purchase Plan. Outside directors,
consultants and employees subject to the rules or laws of a foreign jurisdiction
that prohibit or make impractical the participation of such individuals in the
Stock Purchase Plan are not eligible to participate in the Stock Purchase Plan.
    
 
   
    The Stock Purchase Plan designates Purchase Periods, Accrual Periods and
Exercise Dates. Purchase Periods are generally overlapping periods of 24 months.
A Purchase Period will initiate on the effective date of the Registration
Statement applicable to the offering and additional Purchase Periods will
commence each subsequent January and July. The initial Purchase Period will end
on June 30, 1999. Accrual Periods are generally six months periods. The initial
Accrual Period will commence on the effective date of the offering and end on
June 30, 1997. Thereafter Accrual Periods will commence each January 1 and July
1. The Exercise Dates are the last days of each Accrual Period.
    
 
    On the first day of each Purchase Period, a participating employee is
granted a purchase right which is a form of option to be automatically exercised
on the forthcoming Exercise Dates within the Purchase Period during which
deductions are to be made from the pay of participants (in accordance with their
authorizations) and credited to their accounts under the Stock Purchase Plan.
When the purchase right
 
                                       59
<PAGE>
   
is exercised, the participant's withheld salary is used to purchase shares of
Common Stock of the Company. The price per share at which shares of Common Stock
are to be purchased under the Stock Purchase Plan during any Accrual Period is
the lesser of (a) 85% of the fair market value (as defined in the Stock Purchase
Plan) of the Common Stock on the date of the grant of the option (the
commencement of the Purchase Period) or (b) 85% of the fair market value of the
Common Stock on the Exercise Date (the last day of an Accrual Period). The
participant's purchase right is exercised in this manner on all four Exercise
Dates arising in the Purchase Period unless, on the first day of any Accrual
Period, the fair market value of the Common Stock is lower than the fair market
value of the Common Stock on the first day of the Purchase Period. If so, the
participant's participation in the original Purchase Period is terminated, and
the participant is automatically enrolled in the new Purchase Period commencing
on that day.
    
 
   
    Payroll deductions may range from 1% to 10% (in whole percentage increments)
of a participant's regular base pay, commissions, overtime, bonuses, annual
awards, other incentive payments, and deferred compensation. Participants may
not make direct cash payments to their accounts. The maximum number of shares of
Common Stock which any employee may purchase under the Stock Purchase Plan
during an Accrual Period is 3,000 shares. Certain additional limitations on the
amount of Common Stock which may be purchased during any calendar year are
imposed by the Code.
    
 
    The Stock Purchase Plan will be administered by the Board of Directors or a
committee designated by the Board, which will have the authority to administer
the Stock Purchase Plan and to resolve all questions relating to its
administration.
 
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
 
    The Company's Bylaws provide that the Company will indemnify its directors
and executive officers and may indemnify its other officers, employees and other
agents to the fullest extent permitted by the Delaware General Corporation Law,
as amended. The Company is also empowered under its Bylaws to enter into
indemnification agreements with its directors and officers and to purchase
insurance on behalf of any person whom it is required or permitted to indemnify.
The Company has entered into indemnification agreements with each of its
directors and executive officers and intends to obtain a policy of directors'
and officers' liability insurance that insures such persons against the cost of
defense, settlement or payment of a judgment under certain circumstances.
 
    In addition, the Company's Certificate of Incorporation provides that the
liability of the Company's directors for monetary damages shall be eliminated to
the fullest extent permissible under the Delaware General Corporation Law, as so
amended. This provision in the Certificate of Incorporation does not eliminate a
director's duty of care, and in appropriate circumstances equitable remedies
such as an injunction or other forms of non-monetary relief would remain
available. Each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Company, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for acts
or omissions that the director believes to be contrary to the best interests of
the Company or its stockholders, for any transaction from which the director
derived an improper personal benefit, for improper transactions between the
director and the Company and for improper distributions to stockholders and
loans to directors and officers. This provision also does not affect a
director's responsibilities under any other laws, such as the federal securities
laws or state or federal environmental laws.
 
    Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
 
    There is no pending litigation or proceeding involving a director or officer
of the Company as to which indemnification is being sought, nor is the Company
aware of any pending or threatened litigation that may result in claims for
indemnification by any director or officer.
 
                                       60
<PAGE>
                             PRINCIPAL STOCKHOLDERS
 
   
    The following table sets forth certain information known to the Company with
respect to beneficial ownership of the Company's Common Stock as of February 28,
1997, as adjusted to reflect the sale of shares offered hereby, by (a) each
person known by the Company to own beneficially more than 5% of the outstanding
shares of Common Stock, (b) each of the Company's directors, (c) each Named
Executive Officer (see "Management--Executive Compensation") and (d) all current
executive officers and directors as a group.
    
 
   
<TABLE>
<CAPTION>
                                                             SHARES          PERCENTAGE PRIOR TO   PERCENTAGE AFTER
NAME OF BENEFICIAL OWNER(1)(2)                        BENEFICIALLY OWNED(2)     THE OFFERING      THE OFFERING(2)(3)
- ----------------------------------------------------  ---------------------  -------------------  -------------------
<S>                                                   <C>                    <C>                  <C>
Warburg, Pincus Ventures, L.P.(4)...................         11,870,000                61.7%                49.0%
William T. Coleman III(5)...........................          2,506,828                13.0                 10.3
Alfred S. Chuang(6).................................          1,671,586                 8.7                  6.9
Edward W. Scott, Jr.(7).............................          1,593,786                 8.3                  6.7
William H. Janeway(8)...............................         11,870,000                61.7                 49.0
Stewart K.P. Gross(8)...............................         11,870,000                61.7                 49.0
Cary J. Davis(8)....................................         11,870,000                61.7                 49.0
Carol Bartz(9)......................................            148,750               *                    *
Dean Morton(10).....................................            135,208               *                    *
All executive officers and directors as a
 group(9 persons)(11)...............................         17,925,958                92.8%                73.7%
</TABLE>
    
 
- --------------
 
  * Less than 1% of the outstanding Common Stock.
 
(1) To the Company's knowledge, except as set forth in the footnotes to this
    table and subject to applicable community property laws, each person named
    in the table has sole voting and investment power with respect to the shares
    set forth opposite such person's name. Except as otherwise indicated, the
    address of each of the persons in this table is as follows: c/o BEA Systems,
    Inc., 385 Moffett Park Drive, Suite 105 Sunnyvale, California 94089-1208.
 
   
(2) Based on 24,233,906 shares of voting Common Stock outstanding prior to this
    offering. Does not include 29,406,982 shares of nonvoting Class B Common
    Stock (including 3,209,236 shares of Class B Common Stock issuable upon
    conversion of shares of Series B Preferred Stock assuming an initial public
    offering price of $7.00 per share and proceeds to the Company, after
    deducting the underwriting discount, of $6.51 per share, which conversion
    shall be provided for by the Company's Amended and Restated Certificate of
    Incorporation to be filed prior to the completion of the offering) owned by
    Warburg, which represents all outstanding Class B Common Stock. See
    "Description of Capital Stock." Including such shares, Warburg would hold
    41,276,982 shares or 77.0% of the Company's outstanding stock after this
    offering.
    
 
   
(3) Assumes no exercise of the underwriters' over-allotment option. If the
    over-allotment option is exercised in full, the Company will sell an
    aggregate of 5,750,000 shares of Common Stock.
    
 
   
(4) Includes 307,220 shares issuable within 5 days after the Closing of the
    offering, at Warburg's option, pursuant to a convertible line of credit
    extended to the Company, assuming an initial public offering price of $7.00
    per share and proceeds to the Company, after deducting the underwriting
    discount, of $6.51 per share. See "Certain Transactions--Warburg Line of
    Credit." The sole general partner of Warburg, Pincus Ventures, L.P.
    ("Warburg") is Warburg, Pincus & Co., a New York general partnership ("WP").
    E.M. Warburg, Pincus & Co., LLC, a New York limited liability company
    ("EMWP"), manages Warburg. The members of EMWP are substantially the same as
    the partners of WP. Lionel I. Pincus is the managing partner of WP and the
    managing member of EMWP and may be deemed to control both WP and EMWP. WP
    has a 15% interest in the profits of Warburg as the general partner, and
    also owns approximately 1.5% of the limited partnership interests in
    Warburg.
    
 
                                       61
<PAGE>
   
    Messrs. Janeway and Gross, directors of the Company, are Managing Directors
    and members of EMWP and general partners of WP. As such, Messrs. Janeway and
    Gross may be deemed to have an indirect pecuniary interest (within the
    meaning of Rule 16a-1 under the Securities Exchange Act of 1934) in an
    indeterminate portion of the shares beneficially owned by Warburg and WP.
    See Note 7 below. The address for Warburg, Pincus Ventures, L.P. is 466
    Lexington Avenue, New York, New York, 10017.
    
 
   
(5) Represents 2,786,744 shares held of record by the Coleman Family Trust,
    dated July 12, 1995, of which William T. and Claudia L. Coleman are
    co-trustees. Includes 62,000 shares of which the economic ownership has been
    transferred to certain of Mr. Coleman's relatives. Mr. Coleman retains sole
    voting power and investment power of these shares.
    
 
   
(6) Includes 90,000 shares of which the economic ownership has been transferred
    to certain of Mr. Chuang's relatives. Mr. Chuang retains sole voting power
    and investment power of these shares.
    
 
   
(7) Includes shares held by the following trusts, of which Mr. Scott is the sole
    trustee (i) 10,000 shares held by the Edward W. Scott, Jr. 1996 Irrevocable
    Living Trust for the Benefit of Eneida Sanchez U.D.T. and dated 9/17/96;
    (ii) 20,000 shares held by the Edward W. Scott, Jr. 1996 Irrevocable Living
    Trust for the Benefit of Carolina Gutierrez U.D.T. and dated 9/17/96; and
    (iii) 30,000 shares held by the Edward W. Scott, Jr. 1996 Irrevocable Living
    Trust for the Benefit of Reece D. Scott U.D.T. and dated 9/17/96.
    
 
   
(8) All of the shares indicated as owned by Mr. Janeway, Mr. Gross and Mr. Davis
    are owned directly by Warburg and are included because of Mr. Janeway's, Mr.
    Gross' and Mr. Davis' affiliation with Warburg. Mr. Janeway, Mr. Gross and
    Mr. Davis disclaim beneficial ownership of these shares within the meaning
    of Rule 13d-3 under the Securities Exchange Act of 1934. The address for Mr.
    Janeway, Mr. Gross and Mr. Davis is c/o E.M. Warburg, Pincus & Co., LLC, 466
    Lexington Avenue, New York, New York 10017.
    
 
   
(9) Includes 48,750 shares subject to options exercisable within 60 days after
    February 28, 1997. The address for Ms. Bartz is c/o Autodesk, Inc., 111
    McInnis Parkway, San Rafael, CA 94903.
    
 
   
(10) Includes 35,208 shares subject to options exercisable within 60 days after
    February 28, 1997. The address for Mr. Morton is c/o Hewlett-Packard
    Corporation, 3200 Hillview Avenue, Palo Alto, California 94304.
    
 
   
(11) Includes 83,958 shares subject to options exercisable within 60 days after
    February 28, 1997. Includes 41,276,982 shares beneficially owned by Warburg
    and which shares are included because of the affiliation of Mr. Janeway, Mr.
    Gross and Mr. Davis with Warburg. Mr. Janeway, Mr. Davis and Mr. Gross each
    disclaim beneficial ownership of such shares.
    
 
                                       62
<PAGE>
                              CERTAIN TRANSACTIONS
 
   
    PREFERRED STOCK ISSUANCES
    
 
   
    On September 28, 1995, Warburg entered into a Stock Purchase Agreement with
the Company which was subsequently amended on October 31, 1995, January 10,
1996, April 16, 1996, July 1, 1996, September 3, 1996 and December 18, 1996. As
a result of purchases under such agreement, Warburg acquired an aggregate of
4,000,000 shares of Common Stock, 17,066,000 shares of Series A Preferred Stock
and 19,847,800 shares of Series B Preferred Stock for an aggregate purchase
price of $50,000,000. In addition, on April 24, 1996, the board approved the
purchase of an aggregate of 100,000 shares of Series A Preferred Stock by two
directors of the Company. Each share of Series A Preferred Stock automatically
converts into two shares of Common Stock upon the closing of the offering. Each
share of Series B Preferred Stock is mandatorily redeemable, at a price of $1.00
per share plus accumulated but unpaid dividends, upon the closing of the
offering, unless Warburg elects to convert into Common Stock at least five days
prior to the closing of the offering. If it so elects, Warburg has the right to
convert the Series B Preferred Stock into Common Stock at a rate of $1.00 per
share plus accumulated but unpaid dividends divided by the initial public
offering price per share net of underwriting discounts. Based on an assumed
initial public offering price net of underwriting discount of $6.51 per share
and the dividends accumulated but unpaid to such dates, the Series B Preferred
Stock would have been convertible into 3,192,864 shares of Common Stock at
January 31, 1997 or into 3,209,236 shares at February 28, 1997.
    
 
   
    WARBURG ASSIGNMENT AGREEMENT
    
 
   
    On September 28, 1995, in connection with the Company's acquisition of its
two main operating subsidiaries, the Company and Warburg, the Company's major
stockholder, entered into an Assignment Agreement, under the terms of which
Warburg assigned to the Company certain rights to acquire stock from
stockholders of the subsidiaries, as well as a number of agreements related to
the acquisitions, such as letters of intent and an Escrow Agreement, enabling
the Company to acquire all outstanding stock of the two operating subsidiaries.
See "Risk Factors--Past and Future Acquisitions" and "Management's Discussion
and Analysis of Financial Conditions and Results of Operations--Company
Background."
    
 
   
    WARBURG LINE OF CREDIT
    
 
   
    On January 22, 1997, the Company entered into a credit agreement with
Warburg pursuant to the terms of which Warburg granted the Company a
subordinated line of credit of up to $10,000,000. The agreement provides for an
annual interest rate of 11% and is repayable five business days after the
closing of the offering or on July 22, 1998, whichever occurs first. The
principal of and interest on the loan is convertible, at Warburg's option, into
shares of Common Stock within five days after the closing of the offering, at
the initial public offering price net of underwriting discounts. Based on the
principal and interest outstanding at January 31 and February 28, 1997 and an
assumed initial public offering price net of underwriting discount of $6.51 per
share, borrowings under the line of credit would have been convertible into
153,610 and 307,220 shares of Common Stock, respectively.
    
 
   
    FOUNDERS STOCK ISSUANCES
    
 
    On February 1, 1995 and following the incorporation of the Company, the
Company's three founders, William T. Coleman III, the Company's President and
Chief Executive Officer and a member of its Board of Directors, Edward W. Scott,
Jr., the Company's Executive Vice President for Worldwide Sales and a member of
its Board of Directors and Alfred S. Chuang, the Company's Executive Vice
President of Product Development and Chief Technical officer, purchased
1,200,000, 800,000 and 800,000 shares, respectively, of the Company's Common
Stock at a price of $.005 per share. These shares were
 
                                       63
<PAGE>
purchased pursuant to Restricted Stock Purchase Agreements, which provide for
the repurchase of these shares under certain conditions.
 
   
    On September 28, 1995, Messrs. Coleman, Scott and Chuang purchased
1,306,828, 871,586 and 871,586 shares, respectively, of the Company's Common
Stock at a price per share of $0.285 per share, payable in part in cash and in
part in the form of a full recourse, five-year promissory note secured by the
purchased shares pursuant to a security agreement entered into on the same date.
The original principal amounts of these notes for Messrs. Coleman, Scott and
Chuang were $97,446, $248,402 and $198,402, respectively. The notes bear
interest at 7% per annum. These shares were purchased pursuant to Restricted
Stock Purchase Agreements, which provide for the repurchase at original cost of
these shares in decreasing percentages during the four year period following the
date of issuance of these shares.
    
 
   
    REGISTRATION RIGHTS
    
 
    Certain holders of Common Stock and Warburg, as the holder of shares of
Common Stock issued upon conversion of the Series A and Series B Preferred
Stock, are entitled to certain registration rights. See "Description of Capital
Stock--Registration Rights."
 
   
    FOUNDERS' LOANS AND EMPLOYMENT AGREEMENTS
    
 
   
    On December 12, 1995, Edward W. Scott, the Company's Executive Vice
President of Worldwide Operations issued a promissory note in the amount of
$720,000 in favor of the Company for the purpose of financing real property. The
note bears interest at 7% per annum and is secured by a deed of trust covering
the property acquired by Mr. Scott. Pursuant to its terms, the note is repayable
upon expiration of Mr. Scott's employment agreement with the Company. See
"Management--Employment Agreements."
    
 
   
    The Company has entered into employment agreements with certain of its
directors and officers. See "Management--Employment Agreements."
    
 
   
    POLICY REGARDING FUTURE AFFILIATE TRANSACTIONS
    
 
    All future transactions, including loans, between the Company and its
officers, directors, principal stockholders and their affiliates will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors on the Board of Directors.
 
                                       64
<PAGE>
                          DESCRIPTION OF CAPITAL STOCK
 
   
    Effective upon the closing of the offering, the Company will be authorized
to issue up to 120,000,000 shares, $.001 par value, to be divided into two
classes to be designated, respectively, "Common Stock" and "Preferred Stock." Of
such shares authorized, 115,000,000 shares shall be designated as Common Stock,
of which 35,000,000 shares shall be designated Class B Common Stock, and
5,000,000 as Preferred Stock.
    
 
COMMON STOCK
 
   
    As of February 28, 1997, there were 19,233,962 shares of Common Stock
outstanding that were held of record by approximately 39 stockholders (assuming
conversion of all shares of Preferred Stock and borrowings under the convertible
loan arrangement outstanding as of February 28, 1997). There will be 24,233,962
shares of Common Stock outstanding (assuming no exercise of the Underwriters'
overallotment options and no exercise of outstanding options) after giving
effect to the sale of Common Stock offered to the public by the Company hereby.
    
 
    The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. The Company does
not have cumulative voting rights in the election of directors, and accordingly,
holders of a majority of the shares voting are able to elect all of the
directors. Subject to preferences that may be granted to any then outstanding
Preferred Stock, holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available therefor as well as any distributions to the stockholders. See
"Dividend Policy." In the event of a liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share ratably in all assets
of the Company remaining after payment of liabilities and the liquidation
preference of any then outstanding Preferred Stock. Holders of Common Stock have
no preemptive or other subscription of conversion rights. There are no
redemption or sinking fund provisions applicable to the Common Stock.
 
   
CLASS B COMMON STOCK
    
 
   
    All 29,406,982 shares of Class B Common Stock will be issued upon conversion
of certain shares of Series A Preferred Stock and Series B Preferred Stock at or
prior to the closing of this offering, and will be held by Warburg. The Class B
Common Stock has the same rights, preferences, privileges and restrictions as
the Common Stock, except that the Class B Common Stock is convertible into
Common Stock, has no voting rights (except as required by Delaware law) and has
no right to vote for the election of directors. The shares of Class B Common
Stock will, upon any transfer of such shares by Warburg, be automatically
converted into a like number of shares of Common Stock, subject to adjustment
upon certain events with respect to the Common Stock. The shares of Class B
Common Stock are also convertible at the option of Warburg into Common Stock, so
long as such conversion results in Warburg holding equal to or less than 49% of
the Company's outstanding voting securities.
    
 
PREFERRED STOCK
 
   
    Effective upon the closing of the offering and pursuant to the Company's
Certificate of Incorporation, the Board of Directors will have the authority,
without further action by the stockholders, to issue up to 5,000,000 shares of
Preferred Stock in one or more series and to fix the rights, preferences,
privileges and restrictions thereof, including dividend rights, conversion
rights, voting rights, terms of redemption, liquidation preferences, sinking
fund terms and the number of shares constituting any series or the designation
of such series, any or all of which may be greater than the rights of Common
Stock, without any further vote or action by stockholders. The issuance of
Preferred Stock could adversely affect the voting power of holders of Common
Stock and the likelihood that such holders will receive dividend payments and
payments upon liquidation and could have the effect of delaying,
    
 
                                       65
<PAGE>
   
deferring or preventing a change in control of the Company. The Company has no
present plan to issue any shares of Preferred Stock after consummation of the
offering.
    
 
   
REGISTRATION RIGHTS
    
 
   
    Pursuant to an investor rights agreement (the "Rights Agreement") entered
into in September 1995 between the Company and holders (the "Holders") of
approximately 47,307,484 shares of the Company's Common Stock, including William
T. Coleman III, Alfred S. Chuang, Edward W. Scott, Jr., and Warburg, the Holders
are entitled to certain rights with respect to the registration of such shares
under the Securities Act of 1933, as amended (the "Securities Act"). In
addition, Warburg has an option, exercisable at Warburg's option within five
days after the closing of the offering, to acquire certain shares of Common
Stock upon conversion of the outstanding amounts under a $10,000,000 line of
credit extended to the Company which shares are also entitled to registration
rights under the Rights Agreement. See "Certain Transactions--Warburg Line of
Credit." If the Company proposes to register any of its securities under the
Securities Act, either for its own account or the account of other security
holders, the Company is required to notify such Holders and to use its best
efforts to effect the registration, and such Holders are entitled to include at
the Company's expense their Registrable Securities (as such term is defined in
the Rights Agreement) in such registration, subject to certain conditions and
limitations. In addition, Holders may also require the Company to file a
registration statement under the Securities Act at the Company's expense with
respect to their shares, and the Company is required to use its diligent
reasonable efforts to effect such registration. Further, Holders may require the
Company to file registration statements on Form S-3 at the Company's expense,
when such form is available for use by the Company. These rights are subject to
certain conditions and limitations, among them the right of the underwriters of
an offering to limit the number of shares included in such registration and the
right of the Company not to effect a requested registration within six months
following a registered offering of the Company's securities, including the
offering made hereby. See "Certain Transactions--Registration Rights."
    
 
ANTITAKEOVER EFFECTS OF PROVISIONS OF THE COMPANY'S CHARTER AND BYLAWS
 
   
    Upon completion of the offering, the Certificate of Incorporation of the
Company will provide for the Board of Directors to be divided into three
classes, with staggered three-year terms. As a result, only one class of
directors will be elected at each annual meeting of stockholders of the Company,
with the other classes continuing for the remainder of their respective
three-year terms. Stockholders will have no cumulative voting rights and the
Company's stockholders representing a majority of the shares of Common Stock
outstanding are able to elect all of the directors. The Company's Bylaws will
also provide that all stockholder action must be effected at a duly called
meeting of stockholders and not by a consent in writing; the Bylaws provide that
only the Company's Chief Executive Officer, the President of the Company and the
Board of Directors may call a special meeting of stockholders.
    
 
    The classification of the Board of Directors and lack of cumulative voting
will make it more difficult for the Company's existing stockholders to replace
the Board of Directors as well as for another party to obtain control of the
Company by replacing the Board of Directors. Since the Board of Directors has
the power to retain and discharge officers of the Company, these provisions
could also make it more difficult for existing stockholders or another party to
effect a change in management.
 
    These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of the Company. These
provisions are intended to enhance the likelihood of continued stability in the
composition of the Board of Directors and in the policies furnished by the Board
of Directors and to discourage certain types of transactions that may involve an
actual or threatened change of control of the Company. These provisions are
designed to reduce the vulnerability of the Company to an unsolicited
acquisition proposal. The provisions also are intended to discourage certain
tactics that may be used in proxy fights. However, such provisions could have
the effect of discouraging
 
                                       66
<PAGE>
others from making tender offers for the Company's shares and, as a consequence,
they also may inhibit fluctuations in the market price of the Company's shares
that could result from actual or rumored takeover attempts. Such provisions also
may have the effect of preventing changes in the management of the Company. See
"Risk Factors--Antitakeover Effects of Certificate of Incorporation, Bylaws and
Delaware Law."
 
SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW
 
    The Company is subject to Section 203 or the Delaware General Corporation
Law ("Section 203"), which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the Board of
Directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested holder, (ii)
upon consummation of the transaction that that resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned (a) by persons who are directors and also
officers and (b) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) at or subsequent
to such time, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.
 
    In general, Section 203 defines business combination to include: (i) any
merger or consolidation involving the corporation and the interested
stockholder, (ii) any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested stockholder, (iii)
subject to certain exceptions, any transaction that results in the issuance or
transfer by the corporation of any stock of the corporation to the interested
stockholder, (iv) any transaction involving the corporation that has the effect
of increasing the proportionate share of the stock or any class or series of the
corporation beneficially owned by the interested stockholder or (v) the receipt
by the interested stockholder of the benefit of any loss, advances, guarantees,
pledges or other financial benefits by or through the corporation. In general,
Section 203 defines interested stockholder as an entity or person beneficially
owning 15% or more of the outstanding voting stock of the corporation and any
entity or person affiliated with or controlling or controlled by such entity or
person. See "Risk Factors--Antitakeover Effects of Certificate of Incorporation,
Bylaws and Delaware Law."
 
LISTING
 
   
    Application has been made to have the Common Stock approved for quotation on
the Nasdaq National Market under the symbol "BEAS."
    
 
TRANSFER AGENT AND REGISTRAR
 
    The transfer agent and registrar for the Common Stock of the Company is
Boston EquiServe. Its address is 150 Royall Street, Canton, Massachusetts 02021,
and its telephone number is (617) 575-3120.
 
                                       67
<PAGE>
   
                        SHARES ELIGIBLE FOR FUTURE SALE
    
 
   
    Sales of a substantial number of shares of Common Stock after the offering
could adversely affect the market price of the Common Stock and could impair the
Company's ability to raise capital through the sale of equity securities. Upon
completion of the offering, the Company will have 53,640,948 shares of Common
Stock (including 29,406,982 shares of Common Stock issuable upon conversion of
the Class B Common Stock) outstanding based on shares outstanding as of February
28, 1997. Of these shares, the 5,000,000 shares sold in the offering will be
freely transferable without restriction under the Securities Act, unless they
are held by "affiliates" of the Company as that term is used under the
Securities Act and the Regulations promulgated thereunder.
    
 
   
    The remaining 48,640,944 outstanding shares were sold by the Company in
reliance on exemptions from the registration requirements of the Securities Act
and are restricted securities within the meaning of Rule 144 under the
Securities Act. None of these shares will be eligible for sale in the public
market at the effective date of the Registration Statement of which this
Prospectus is a part (the "Effective Date"). Beginning 180 days after the date
of this Prospectus, approximately 47,440,366 additional shares will become
eligible for sale subject to the provisions of Rule 144 or Rule 701 upon the
expiration of agreements not to sell such shares entered into with Goldman,
Sachs & Co. or the Company. The remainder of the shares will be eligible for
sale from time to time thereafter upon expiration of their respective one-year
holding period, subject in each case to the restrictions on such sales by
affiliates of the Company. Beginning 180 days after the date of this Prospectus,
approximately 2,010,514 additional shares subject to vested options as of the
date of this Prospectus will be available for sale subject to compliance with
Rule 701 and upon the expiration of agreements not to sell such shares entered
into with Goldman, Sachs & Co. or the Company. In addition, 428,571 additional
shares (assuming the consummation of the Digital agreement and an initial
offering price of $7.00 per share) subject to outstanding warrants will be
available for sale 180 days after the date of this prospectus. The remainder of
the shares will be eligible for sale from time to time thereafter upon
expiration of their respective one-year holding periods, subject in each case to
the restrictions on such sales by affiliates of the Company. Any shares subject
to lock-up agreements may be released at any time without notice by Goldman,
Sachs & Co.
    
 
   
    As soon as practicable after the Effective Date, the Company intends to file
a registration statement on Form S-8 under the Securities Act to register shares
of Common Stock reserved for issuance under the 1995 Flexible Stock Incentive
Plan, the 1997 Stock Incentive Plan and the 1997 Employee Stock Purchase Plan,
thus permitting the resale of such shares by non-affiliates in the public market
without restriction under the Securities Act unless subject to lock-up
agreements. Such registration statement will become effective immediately upon
filing.
    
 
   
    Prior to the offering, there has been no public market for the Common Stock
of the Company, and any sale of substantial amounts in the open market may
adversely affect the market price of the Common Stock offered hereby. See "Risk
Factors--Potential Effect of Shares Eligible for Future Sale on Market Price of
Common Stock."
    
 
                                 LEGAL MATTERS
 
   
    The validity of the Common Stock offered hereby will be passed upon for the
Company by Morrison & Foerster LLP, Palo Alto, California. A partner at Morrison
& Foerster LLP owns 50,000 shares of Common Stock of the Company. Certain legal
matters in connection with the offerings will be passed upon for the
Underwriters by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.
    
 
                                       68
<PAGE>
                                    EXPERTS
 
   
    The consolidated balance sheets of BEA Systems, Inc. as of January 31, 1996
and January 31, 1997, and the consolidated statements of operations, redeemable,
convertible preferred stock and stockholders' equity (deficit) and cash flows
for the years ended January 31, 1996 and 1997, appearing in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
are included in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.
    
 
    The balance sheets of Information Management Company as of December 31, 1994
and September 29, 1995, and the statements of operations and retained earnings
(deficit) and cash flows for the year ended December 31, 1994 and for the nine
months ended September 29, 1995, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
 
   
    The statements of operations and cash flows of Independent Technologies,
Inc. for the period from January 1, 1995 to November 1, 1995, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
    
 
    The consolidated balance sheet of USL Finance S.A. as of May 5, 1996, and
the consolidated statements of operations, shareholders' equity and cash flows
for the period from November 1, 1995 to May 5, 1996, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young Audit,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
 
                             ADDITIONAL INFORMATION
 
    The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form SB-2
under the Securities Act of 1933, as amended, with respect to the Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
Certain items are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules filed as a part thereof. Statements contained in this
Prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and, in each instance, if such contract or
document is filed as an exhibit, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference to such exhibit. The
Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at the North Western Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, NY 10048, and copies of all or any part
thereof may be obtained from such office after payment of fees prescribed by the
Commission. The Commission maintains a web site at http://www.sec.gov that
contains, reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
 
                                       69
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
   
<TABLE>
<S>                                                                                    <C>
BEA SYSTEMS, INC.
CONSOLIDATED FINANCIAL STATEMENTS--YEARS ENDED JANUARY 31, 1996 AND 1997
Report of Ernst & Young LLP, Independent Auditors....................................        F-2
  Consolidated Balance Sheets........................................................        F-3
  Consolidated Statements of Operations..............................................        F-4
  Consolidated Statements of Redeemable Convertible Preferred Stock and
    Stockholders' Equity (Deficit)...................................................        F-5
  Consolidated Statements of Cash Flows..............................................        F-6
  Notes to Consolidated Financial Statements.........................................        F-7
 
INFORMATION MANAGEMENT COMPANY
FINANCIAL STATEMENTS--YEAR ENDED DECEMBER 31, 1994 AND NINE MONTHS ENDED SEPTEMBER
  29, 1995
Report of Ernst & Young LLP, Independent Auditors....................................       F-25
  Balance Sheets.....................................................................       F-26
  Statements of Operations and Retained Earnings (Deficit)...........................       F-27
  Statements of Cash Flows...........................................................       F-28
  Notes to Financial Statements......................................................       F-29
 
INDEPENDENCE TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS AND CASH FLOWS--FOR THE PERIOD FROM JANUARY 1, 1995 TO
  NOVEMBER 1, 1995
Report of Ernst & Young LLP, Independent Auditors....................................       F-33
  Statement of Operations............................................................       F-34
  Statement of Cash Flows............................................................       F-35
  Notes to Statements of Operations and Cash Flows...................................       F-36
 
USL FINANCE S.A.
CONSOLIDATED FINANCIAL STATEMENTS--FOR THE PERIOD FROM NOVEMBER 1, 1995 TO
  MAY 5, 1996
Report of Ernst & Young Audit, Independent Auditors..................................       F-39
  Consolidated Balance Sheet.........................................................       F-40
  Consolidated Statement of Operations...............................................       F-41
  Consolidated Statement of Shareholders' Equity.....................................       F-42
  Consolidated Statement of Cash Flows...............................................       F-43
  Notes to Consolidated Financial Statements.........................................       F-44
</TABLE>
    
 
                                      F-1
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors and Stockholders
BEA Systems, Inc.
 
   
    We have audited the accompanying consolidated balance sheets of BEA Systems,
Inc. as of January 31, 1996 and 1997, and the related consolidated statements of
operations, redeemable convertible preferred stock and stockholders' equity
(deficit), and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
    
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
   
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of BEA Systems,
Inc. at January 31, 1996 and 1997, and the consolidated results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
    
 
                                                               ERNST & YOUNG LLP
 
   
San Jose, California
March 10, 1997, except for Note 14,
as to which the date is March 19, 1997
    
 
                                      F-2
<PAGE>
                               BEA SYSTEMS, INC.
                          CONSOLIDATED BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
 
   
<TABLE>
<CAPTION>
                                                                                         JANUARY 31,
                                                                                  -------------------------
                                                                                     1996          1997
                                                                                  -----------   -----------
                                                                                                                 PRO FORMA
                                                                                                               STOCKHOLDERS'
                                                                                                                  EQUITY
                                                                                                               (DEFICIT) AT
                                                                                                                JANUARY 31,
                                                                                                                   1997
                                                                                                               (SEE NOTE 11)
                                                                                                              ---------------
                                                                                                                (UNAUDITED)
                                                           ASSETS
<S>                                                                               <C>           <C>           <C>
Current assets:
  Cash and cash equivalents.....................................................   $  4,549      $   3,283
  Accounts receivable, net of allowance for doubtful accounts of $400 at January
    31, 1996 and $1,095 at January 31, 1997.....................................      3,725         24,778
  Prepaid expenses and other current assets.....................................        752          3,083
                                                                                  -----------   -----------
Total current assets............................................................      9,026         31,144
Property and equipment, net.....................................................        456          6,648
Acquired intangible assets, net.................................................      8,751         17,226
Note receivable from officer....................................................        720            720
Other assets....................................................................     --              2,235
                                                                                  -----------   -----------
Total assets....................................................................   $ 18,953      $  57,973
                                                                                  -----------   -----------
                                                                                  -----------   -----------
 
                                       LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Borrowings under line of credit...............................................   $ --          $   9,050
  Accounts payable..............................................................        772          3,488
  Accrued payroll and related liabilities.......................................        800          6,597
  Accrued sales tax.............................................................        949          1,573
  Other accrued liabilities.....................................................      1,032          6,030
  Royalties payable.............................................................        777            327
  Deferred revenue..............................................................      2,146          8,697
  Current portion of notes payable and capital lease obligations................         40         28,180
                                                                                  -----------   -----------
Total current liabilities.......................................................      6,516         63,942
Notes payable and capital lease obligations.....................................      4,287         49,540
Commitments.....................................................................
Series B redeemable convertible preferred stock, $0.001 par value:
  Authorized shares--20,000,000
  Issued and outstanding shares--6,060,000 at January 31, 1996 and 19,847,800 at
    January 31, 1997, (none pro forma); liquidation preference of $20,780 at
    January 31, 1997............................................................      6,112         20,780       $--
 
Stockholders' equity (deficit):
  Series A preferred stock, $0.001 par value....................................         11             17        --
    Authorized shares--20,000,000
    Issued and outstanding shares--11,100,000 at January 31, 1996 and 17,166,000
      at January 31, 1997, (none pro forma); liquidation preference of $29,182
      at January 31, 1997.......................................................
  Common stock, $0.001 par value................................................          8             11             48
    Authorized shares--80,000,000
    Issued and outstanding shares--8,274,000 at January 31, 1996 and 10,747,787
      at January 31, 1997, and 48,425,363 pro forma.............................
Additional paid-in capital......................................................     20,355         32,335         54,095
Notes receivable from stockholders..............................................       (544)          (544)          (544)
Deferred compensation...........................................................     --               (845)          (845)
Cumulative translation adjustment...............................................     --                 74             74
Accumulated deficit.............................................................    (17,792)      (107,337)      (107,337)
                                                                                  -----------   -----------   ---------------
Stockholders' equity (deficit)..................................................      2,038        (76,289)      $(54,509)
                                                                                  -----------   -----------   ---------------
                                                                                                              ---------------
Total liabilities and stockholders' equity (deficit)............................   $ 18,953      $  57,973
                                                                                  -----------   -----------
                                                                                  -----------   -----------
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-3
<PAGE>
                               BEA SYSTEMS, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
   
<TABLE>
<CAPTION>
                                                                                          YEAR ENDED JANUARY 31,
                                                                                        --------------------------
                                                                                            1996          1997
                                                                                        ------------  ------------
<S>                                                                                     <C>           <C>
Revenues:
  License.............................................................................   $    3,569    $   46,839
  Service.............................................................................        1,564        14,759
                                                                                        ------------  ------------
    Total revenues....................................................................        5,133        61,598
 
Cost of revenues:
  License.............................................................................        1,929        10,287
  Service.............................................................................          775         8,320
                                                                                        ------------  ------------
    Total cost of revenues............................................................        2,704        18,607
                                                                                        ------------  ------------
Gross margin..........................................................................        2,429        42,991
 
Operating expenses:
  Research and development............................................................        3,244        18,183
  Sales and marketing.................................................................        2,572        30,970
  General and administrative..........................................................        3,058        12,732
  Write-off of in-process research and development....................................       11,194        62,248
                                                                                        ------------  ------------
Total operating expenses..............................................................       20,068       124,133
                                                                                        ------------  ------------
Income (loss) from operations.........................................................      (17,639)      (81,142)
 
Interest expense......................................................................          (89)       (6,727)
Other income (expense)................................................................           48             4
                                                                                        ------------  ------------
 
Income (loss) before income taxes.....................................................      (17,680)      (87,865)
Provision for income taxes............................................................           60           800
                                                                                        ------------  ------------
Net income (loss).....................................................................   $  (17,740)   $  (88,665)
                                                                                        ------------  ------------
                                                                                        ------------  ------------
Pro forma net income (loss) per share.................................................                 $    (1.73)
                                                                                                      ------------
                                                                                                      ------------
Shares used in computing pro forma net income (loss) per share........................                     51,162
                                                                                                      ------------
                                                                                                      ------------
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-4
<PAGE>
   
                               BEA SYSTEMS, INC.
      CONSOLIDATED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
                         STOCKHOLDERS' EQUITY (DEFICIT)
                     YEARS ENDED JANUARY 31, 1996 AND 1997
    
 
                         (IN THOUSANDS, EXCEPT SHARES)
   
<TABLE>
<CAPTION>
                                                                            STOCKHOLDERS' EQUITY (DEFICIT)
                                       SERIES B           ------------------------------------------------------------------
                                REDEEMABLE CONVERTIBLE
                                                               SERIES A
                                    PREFERRED STOCK        PREFERRED STOCK        COMMON STOCK      ADDITIONAL
                                -----------------------   ------------------   ------------------    PAID-IN     ACCUMULATED
                                  SHARES      AMOUNT        SHARES    AMOUNT     SHARES    AMOUNT    CAPITAL       DEFICIT
                                ----------  -----------   ----------  ------   ----------  ------   ----------   -----------
<S>                             <C>         <C>           <C>         <C>      <C>         <C>      <C>          <C>
Issuance of common stock......     --         $--             --       $--      8,000,000   $ 8      $ 1,446      $  --
Exercise of stock options.....     --          --             --       --         100,000   --             1         --
Issuance of preferred stock...     --          --         11,100,000    11         --       --        18,859         --
Issuance of Series B
 redeemable convertible
 preferred stock..............  6,060,000       6,060         --       --          --       --         --            --
Accretion of cumulative
 dividends on Series B
 redeemable convertible
 preferred stock..............     --              52         --       --          --       --         --               (52)
Issuance of common stock for
 services.....................     --          --             --       --         174,000   --            49         --
Net loss......................     --          --             --       --          --       --         --           (17,740)
                                ----------  -----------   ----------  ------   ----------  ------   ----------   -----------
Balance at January 31, 1996...  6,060,000       6,112     11,100,000    11      8,274,000     8       20,355        (17,792)
Issuance of preferred stock...     --          --          6,066,000     6         --       --        10,306         --
Issuance of common stock......     --          --             --       --       2,000,000     2          568         --
Exercise of stock options.....     --          --             --       --         403,787     1          113         --
Issuance of Series B
 redeemable convertible
 preferred stock..............  13,787,800     13,788         --       --          --       --         --            --
Accretion of cumulative
 dividends on Series B
 redeemable convertible
 preferred stock..............     --             880         --       --          --       --         --              (880)
Issuance of common stock for
 services.....................     --          --             --       --          70,000   --            20         --
Deferred compensation related
 to grant of stock options....     --          --             --       --          --       --           973         --
Amortization of deferred
 compensation.................     --          --             --       --          --       --         --            --
Translation adjustment........     --          --             --       --          --       --         --            --
Net loss......................     --          --             --       --          --       --         --           (88,665)
                                ----------  -----------   ----------  ------   ----------  ------   ----------   -----------
Balance at January 31, 1997...  19,847,800    $20,780     17,166,000   $17     10,747,787   $11      $32,335      $(107,337)
                                ----------  -----------   ----------  ------   ----------  ------   ----------   -----------
                                ----------  -----------   ----------  ------   ----------  ------   ----------   -----------
 
<CAPTION>
 
                                             STOCKHOLDERS' EQUITY (DEFICIT)
                                ---------------------------------------------------------
                                   NOTES                                        TOTAL
                                 RECEIVABLE                   CUMMULATIVE   STOCKHOLDERS'
                                    FROM         DEFERRED     TRANSLATION      EQUITY
                                STOCKHOLDERS   COMPENSATION   ADJUSTMENT      (DEFICIT)
                                ------------   ------------   -----------   -------------
<S>                             <C>            <C>            <C>           <C>
Issuance of common stock......     $(544)         $--           --$           $     910
Exercise of stock options.....     --             --            --                    1
Issuance of preferred stock...     --             --            --               18,870
Issuance of Series B
 redeemable convertible
 preferred stock..............     --             --            --              --
Accretion of cumulative
 dividends on Series B
 redeemable convertible
 preferred stock..............     --             --            --                  (52)
Issuance of common stock for
 services.....................     --             --            --                   49
Net loss......................     --             --            --              (17,740)
                                  ------         ------           ---       -------------
Balance at January 31, 1996...      (544)         --            --                2,038
Issuance of preferred stock...     --             --            --               10,312
Issuance of common stock......     --             --            --                  570
Exercise of stock options.....     --             --            --                  114
Issuance of Series B
 redeemable convertible
 preferred stock..............     --             --            --              --
Accretion of cumulative
 dividends on Series B
 redeemable convertible
 preferred stock..............     --             --            --                 (880)
Issuance of common stock for
 services.....................     --             --            --                   20
Deferred compensation related
 to grant of stock options....     --              (973)        --              --
Amortization of deferred
 compensation.................     --               128         --                  128
Translation adjustment........     --             --               74                74
Net loss......................     --             --            --              (88,665)
                                  ------         ------           ---       -------------
Balance at January 31, 1997...     $(544)         $(845)          $74         $ (76,289)
                                  ------         ------           ---       -------------
                                  ------         ------           ---       -------------
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-5
<PAGE>
                               BEA SYSTEMS, INC.
 
   
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
    
 
                                 (IN THOUSANDS)
 
   
<TABLE>
<CAPTION>
                                                                                                   YEAR ENDED
                                                                                                  JANUARY 31,
                                                                                              --------------------
                                                                                                1996       1997
                                                                                              ---------  ---------
<S>                                                                                           <C>        <C>
OPERATING ACTIVITIES
Net loss....................................................................................  $ (17,740) $ (88,665)
Adjustments to reconcile net loss to net cash used in operating activities:
  Depreciation and amortization.............................................................         39      1,490
  Amortization of deferred compensation.....................................................         --        128
  Amortization of intangible assets acquired and write-off of in-process research and
    development.............................................................................     12,302     71,054
  Issuance of note for compensation.........................................................      1,429         --
  Issuance of common stock for services.....................................................         49         20
  Changes in assets and liabilities:
    Interest accrued........................................................................         89        329
    Accounts receivable.....................................................................     (1,510)   (13,968)
    Prepaid expenses and other current assets...............................................       (576)    (2,024)
    Other assets............................................................................         --     (2,231)
    Accounts payable........................................................................        772      2,598
    Accrued payroll and related liabilities.................................................         80      5,797
    Other accrued liabilities...............................................................     (4,261)    (2,743)
    Accrued sales tax.......................................................................        949        622
    Royalties payable.......................................................................        777       (450)
    Deferred revenue........................................................................      2,146      6,378
                                                                                              ---------  ---------
Net cash used in operating activities.......................................................     (5,455)   (21,665)
                                                                                              ---------  ---------
INVESTING ACTIVITIES
Acquisition of property and equipment.......................................................        (67)    (4,667)
Acquisition of businesses, net of cash acquired.............................................    (15,050)    (2,566)
Note receivable from officer................................................................       (720)        --
                                                                                              ---------  ---------
Net cash used in investing activities.......................................................    (15,837)    (7,233)
                                                                                              ---------  ---------
FINANCING ACTIVITIES
Borrowings under line of credit.............................................................         --      9,050
Repayment of principal on notes payable and capital lease obligations.......................         --     (7,540)
Proceeds from debt issuances................................................................         --      1,264
Proceeds from issuance of common and preferred stock........................................     25,841     24,784
                                                                                              ---------  ---------
Net cash provided by financing activities...................................................     25,841     27,558
                                                                                              ---------  ---------
Net increase (decrease) in cash and cash equivalents........................................      4,549     (1,340)
Cumulative translation adjustment...........................................................         --         74
Cash and cash equivalents at beginning of period............................................         --      4,549
                                                                                              ---------  ---------
Cash and cash equivalents at end of period..................................................  $   4,549  $   3,283
                                                                                              ---------  ---------
                                                                                              ---------  ---------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest....................................................  $      --  $   6,285
                                                                                              ---------  ---------
                                                                                              ---------  ---------
Cash paid for income taxes..................................................................  $      --  $     230
                                                                                              ---------  ---------
                                                                                              ---------  ---------
Incurrence of capital lease obligations related to acquisition of equipment.................  $      --  $   1,001
                                                                                              ---------  ---------
                                                                                              ---------  ---------
Notes issued to acquire businesses..........................................................  $   2,730  $  78,217
                                                                                              ---------  ---------
                                                                                              ---------  ---------
</TABLE>
    
 
                            See accompanying notes.
 
                                      F-6
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
   
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    
 
DESCRIPTION OF BUSINESS
 
    BEA Systems, Inc. (the "Company" or "BEA"), a Delaware corporation, was
incorporated on January 20, 1995. The Company designs, develops, markets, and
supports the BEA Enterprise Transaction Framework, an integrated middleware
software platform for building, deploying, and managing distributed
mission-critical computer software applications. In addition to its software
products, the Company provides customer solutions through a range of
professional services offerings.
 
BASIS OF PRESENTATION
 
   
    On September 30, 1995, the Company acquired all of the shares of Information
Management Company ("IMC") for approximately $10,420,000. The transaction was
recorded using the purchase method of accounting. Accordingly, a new basis of
accounting was established based on the purchase price. See Note 2.
    
 
   
    The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries. All intercompany transactions and
balances have been eliminated. Operations of businesses acquired and accounted
for as purchases are consolidated as of the date of acquisition. The Company had
no operating activity from inception through January 31, 1995. Accordingly,
operating results for the year ending January 31, 1996 reflect the period from
incorporation (January 20, 1995) to January 31, 1996.
    
 
   
    The Company has incurred operating losses to date, including a net loss of
approximately $88.7 million for the year ended January 31, 1997. At January 31,
1997, the Company had a stockholders' deficit of approximately $76.3 million and
current liabilities exceeded current assets by approximately $32.8 million. The
majority shareholder of the Company has guaranteed certain payment obligations
of the Company as discussed in Note 6. In addition, in January 1997, the Company
received a $10,000,000 unsecured line of credit from the majority stockholder.
The Company anticipates additional equity funding will be needed to finance
expected operations in the fiscal year ending January 31, 1998 and for existing
obligations. If such additional equity funding is not available, management
believes, based on anticipated operations, that available resources combined
with the majority shareholder line of credit and debt payment guaranty will
provide sufficient resources to enable the Company to meet its obligations
through at least January 31, 1998. If anticipated operations are not achieved,
management has the intent and believes it has the ability to delay or reduce
expenditures so as not to require additional financial resources if such
resources were not available.
    
 
USE OF ESTIMATES
 
    The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
 
CONCENTRATION OF CREDIT RISK
 
    The Company sells its products to customers, typically large corporations,
in a variety of industries in North America, Europe, and Asia/Pacific. The
Company performs ongoing credit evaluations of its
 
                                      F-7
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
customers and generally does not require collateral. The Company maintains
reserves for estimated credit losses and such losses have been within
management's expectations.
 
FOREIGN CURRENCY TRANSLATION
 
   
    The functional currency of the Company's foreign subsidiaries is the local
currency of the respective subsidiary. The Company translates the assets and
liabilities of its foreign subsidiaries to U.S. dollars at the rates of exchange
in effect at the end of the period, while revenues and expenses are translated
at average rates during the period. Gains and losses from currency translation
are included in stockholders' equity (deficit). Currency transaction gains or
losses are recognized in current operations.
    
 
CASH AND CASH EQUIVALENTS
 
    Cash and cash equivalents include cash and highly liquid investments with
insignificant interest rate risk and maturities of three months or less at the
date of purchase.
 
PROPERTY AND EQUIPMENT
 
   
    Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets which
range from three to five years. Assets under capital leases and leasehold
improvements are amortized over the shorter of the asset life or the remaining
lease term. The related amortization expense is included in depreciation
expense.
    
 
INTANGIBLE ASSETS
 
   
    Intangible assets consist of developed technology, distribution rights,
trademarks and tradenames and goodwill related to acquisitions accounted for by
the purchase method. See Note 2. Amortization of these purchased intangibles is
provided on the straight-line basis over the respective useful lives of the
assets ranging from twenty-four to thirty months for developed technology and
distribution rights to sixty months for trademarks and tradenames and goodwill.
Acquired in-process research and development without alternative future use is
expensed when acquired.
    
 
FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    The estimated fair value amounts discussed below have been determined by the
Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting market
data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that the Company
could realize in a current market exchange.
 
   
    The Company maintains its cash and cash equivalents principally with major
banks. At January 31, 1996 and 1997, the Company had $3.8 million and $19,000,
respectively, of cash and cash equivalents invested in money market mutual funds
which invest in various short-term corporate debt instruments and U.S. Treasury
bills. The carrying value of these investments by the Company approximate their
market value, and therefore, no unrealized gains or losses exist at January 31,
1996 or 1997.
    
 
                                      F-8
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
   
    At January 31, 1997, the carrying value of notes receivable from
stockholders approximates their fair value. The fair values of notes receivable
from officers and stockholders are estimated using discounted cash flow
analyses, based on interest rates currently being offered for loans with similar
terms to borrowers of similar credit quality.
    
 
    The fair value of short-term and long-term debt is estimated based on
current interest rates available to the Company for debt instruments with
similar terms, the degree of risk, and remaining maturities. The carrying values
of the loans approximate their respective fair values.
 
PRODUCT CONCENTRATION
 
   
    The Company currently derives the majority of its revenue from the licensing
of products in its BEA TUXEDO product line and fees from related services. These
products and services are expected to continue to account for the majority of
the Company's revenue for the foreseeable future. Furthermore, under the terms
of its agreement with Novell, Inc., the Company is obligated to make certain
payments to Novell through January 1999 as discussed in Note 6 to acquire
perpetual rights to the TUXEDO product. Failure by the Company for any reason to
make these payments could terminate the Company's continuing rights to BEA
TUXEDO. A reduction in demand for, or an increase in competition on these
products, or a decline in sales of such products, would adversely affect
operating results.
    
 
REVENUE RECOGNITION
 
   
    The Company recognizes revenues in accordance with American Institute of
Certified Public Accountants Statement of Position 91-1, SOFTWARE REVENUE
RECOGNITION. Revenues from software license agreements are recognized at the
time of product shipment, provided there are no vendor obligations remaining to
be fulfilled and collectibility is probable. Ongoing license royalties are
recognized on an as-reported basis by the Company's licensees.
    
 
    Service revenues include consulting services, post-contract customer support
and training. Consulting revenues and the related cost of these revenues are
generally recognized on a time and materials basis; however, revenue from
certain fixed price contracts are recognized on the percentage of completion
basis, which involves the use of estimates. Actual results could differ from
those estimates and, as a result, future profitability on such contracts may be
more or less than planned. The amount of consulting contracts recognized on a
percentage of completion basis has not been material to date. Post-contract
customer support revenues are recognized ratably over the term of the support
period (generally one year), and training and other service revenues are
recognized as the related services are provided. The unrecognized portion of
amounts paid in advance for licenses and services is reported as deferred
revenues.
 
RESEARCH AND DEVELOPMENT
 
    Research and development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards No. 86, ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED OR OTHERWISE MARKETED, requires
the capitalization of certain software development costs subsequent to the
establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon the
completion of a working model.
 
                                      F-9
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    
Costs incurred by the Company between the completion of the working model and
the point at which the product is ready for general release have been
insignificant. Accordingly, the Company has charged all such costs to research
and development expense in the period incurred.
 
STOCK-BASED COMPENSATION
 
   
    In October 1995, the FASB issued Statement of Financial Accounting Standards
No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION ("FAS 123"). FAS 123 allows
companies that have stock-based compensation arrangements with employees to
adopt a new fair-value basis of accounting for stock options and other equity
instruments, or to continue to apply the existing accounting rules under APB
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), but with
additional financial statement disclosure. The Company has continued to account
for stock-based compensation arrangements under APB 25; therefore, FAS 123 did
not have a material impact on its financial position, results of operations or
cash flows.
    
 
NET LOSS PER SHARE
 
    Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from common stock options and convertible preferred stock are excluded from the
computation as their effect is antidilutive, except that, pursuant to the
Securities and Exchange Commission ("SEC") Staff Accounting Bulletins, common
and common equivalent shares issued during the period commencing twelve months
prior to the initial filing of a proposed public offering at prices below the
assumed public offering price have been included in the calculation as if they
were outstanding for all periods presented (using the treasury stock method at
an assumed offering price per share for stock options and the if-converted
method for preferred stock). Per share information calculated on the above noted
basis is as follows:
 
   
<TABLE>
<CAPTION>
                                                                              YEAR ENDED JANUARY
                                                                                     31,
                                                                             --------------------
                                                                               1996       1997
                                                                             ---------  ---------
Net loss per share.........................................................     $(0.74)     (3.09)
<S>                                                                          <C>        <C>
                                                                             ---------  ---------
Shares used in calculating net loss per share (in thousands)...............     24,128     28,962
                                                                             ---------  ---------
                                                                             ---------  ---------
</TABLE>
    
 
   
    Pro forma net loss per share has been computed as described above and also
gives effect, pursuant to SEC policy, to common equivalent shares from
convertible preferred stock issued more than twelve months from the proposed
initial public offering that will convert upon completion of the Company's
initial public offering (using the if-converted method) from the original date
of issuance.
    
 
2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS
 
ACQUISITION OF INFORMATION MANAGEMENT COMPANY
 
   
    On September 30, 1995, the Company acquired 100% of the outstanding shares
of Information Management Company ("IMC"). The purchase price (including direct
acquisition costs) was approximately $10,420,000 and consisted of cash and the
issuance of notes payable to the founders of
    
 
                                      F-10
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)
    
   
IMC totaling approximately 2,730,000. The Company has accounted for the
acquisition using the purchase method, and the results of operations of IMC are
included in the Company's operations since acquisition.
    
 
    The following is a summary of the purchase price allocation (IN THOUSANDS):
 
   
<TABLE>
<S>                                                                 <C>
Current assets and other tangible assets..........................  $   1,438
Liabilities assumed...............................................     (2,131)
Acquired in-process research and development......................      5,200
Developed technology..............................................      4,780
Trademarks and tradenames.........................................        200
Goodwill..........................................................        933
                                                                    ---------
                                                                    $  10,420
                                                                    ---------
                                                                    ---------
</TABLE>
    
 
ACQUISITION OF INFORMATION TECHNOLOGIES, INC.
 
   
    On November 2, 1995, the Company acquired 100% of the outstanding shares of
Independence Technologies, Inc. ("ITI"). The purchase price (including direct
acquisition costs) was approximately $7,520,000 which was paid in cash. The
Company has accounted for the acquisition using the purchase method, and the
results of operations of ITI are included in the Company's operations since
acquisition.
    
 
    The following is a summary of the purchase price allocation (IN THOUSANDS):
 
   
<TABLE>
<S>                                                                 <C>
Current assets and other tangible assets..........................  $   1,681
Liabilities assumed...............................................     (3,241)
Acquired in-process research and development......................      5,134
Developed technology..............................................      3,946
                                                                    ---------
                                                                    $   7,520
                                                                    ---------
                                                                    ---------
</TABLE>
    
 
ACQUISITION OF TUXEDO PRODUCT LINE
 
   
    On February 23, 1996, the Company entered into a license agreement with
Novell, Inc. ("Novell") and acquired exclusive rights to distribute and make
enhancements to Novell's TUXEDO product on UNIX, Windows NT, and all non-NetWare
platforms. In addition, the Company has assumed Novell's obligations and rights
under all contracts with TUXEDO partners, distributors and customers, and has
exclusive rights to the TUXEDO trademark. The purchase price (including direct
acquisition costs) was approximately $77,500,000 and consists primarily of a
note payable to Novell with fixed payment terms. See Note 6.
    
 
                                      F-11
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)
    
    The following is a summary of the purchase price allocation (IN THOUSANDS):
 
   
<TABLE>
<S>                                                                 <C>
Receivables and other tangible assets.............................  $   4,270
Liabilities assumed...............................................       (702)
Acquired in-process research and development......................     60,948
Developed technology..............................................      9,825
Trademarks and tradenames.........................................      3,159
                                                                    ---------
                                                                    $  77,500
                                                                    ---------
                                                                    ---------
</TABLE>
    
 
ACQUISITION OF USL FINANCE, S.A., A FRENCH CORPORATION
 
   
    On May 5, 1996, the Company acquired 100% of the outstanding shares of USL
Finance, S.A. ("USL"), a distributor of BEA TUXEDO in France. The purchase price
(including direct acquisition costs) was approximately $3,250,000 which was paid
in cash. The Company has accounted for the acquisition using the purchase
method, and the results of operations of USL are included in the Company's
operations since acquisition.
    
 
    The following is a summary of the purchase price allocation (IN THOUSANDS):
 
   
<TABLE>
<S>                                                                  <C>
Current assets and other tangible assets...........................  $   6,060
Liabilities assumed................................................     (5,482)
Distribution rights................................................      2,672
                                                                     ---------
                                                                     $   3,250
                                                                     ---------
                                                                     ---------
</TABLE>
    
 
ACQUISITION OF CLIENT SERVER TECHNOLOGIES, OY, A FINNISH CORPORATION
 
   
    On June 12, 1996, the Company acquired 100% of the outstanding shares in
Client Server Technologies, OY ("CST"), a distributor of BEA TUXEDO in Finland.
The purchase price (including direct acquisition costs) was approximately
$2,163,000 which was paid in cash. The Company has accounted for the acquisition
using the purchase method, and the results of operations of CST are included in
the Company's operations since acquisition.
    
 
    The following is a summary of the purchase price allocation (IN THOUSANDS):
 
   
<TABLE>
<S>                                                                  <C>
Current assets and other tangible assets...........................  $   1,483
Liabilities assumed................................................     (1,067)
In-process research and development................................      1,300
Distribution rights................................................        389
Trademarks and tradenames..........................................         58
                                                                     ---------
                                                                     $   2,163
                                                                     ---------
                                                                     ---------
</TABLE>
    
 
                                      F-12
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
2. BUSINESS COMBINATIONS AND TECHNOLOGY ACQUISITIONS (CONTINUED)
    
   
ACQUISITION OF BAY TECHNOLOGIES PTY. LIMITED.
    
 
   
    On December 23, 1996, the Company acquired 100% of the outstanding shares in
Bay Technologies Pty., Limited ("Bay"), a distributor of BEA Tuxedo in
Australia. The purchase price (including direct acquisition costs) was
approximately $1,006,000 and consisted primarily of a note payable of $915,800.
The Company has accounted for the acquisition using the purchase method, and the
results of operations of Bay Technologies are included in the Company's
operations since acquisition.
    
 
   
    The following is a summary of the purchase price allocation (IN THOUSANDS):
    
 
   
<TABLE>
<S>                                                                  <C>
Current assets and other tangible assets...........................  $     121
Liabilities assumed................................................       (293)
Distribution Rights................................................      1,178
                                                                     ---------
                                                                     $   1,006
                                                                     ---------
                                                                     ---------
</TABLE>
    
 
   
OTHER
    
 
   
    On August 1, 1995, the Company purchased certain technology of VI Systems,
Inc. for $860,000 in cash. The entire purchase price has been charged to
operations as acquired in-process research and development on the date of
acquisition as substantially all of the technology was to be incorporated in
products under development and had no alternative future use.
    
 
   
PRO FORMA INFORMATION
    
 
   
    The following unaudited pro forma summary represents the consolidated
results of operations of the Company as if the acquisitions of TUXEDO from
Novell and USL had occurred at the beginning of the periods presented and does
not purport to be indicative of what would have occurred had the acquisitions
been made as of those dates or the results which may occur in the future. The
operating results of the acquisitions of CST and Bay have not been included in
the below pro forma amounts as the effect is immaterial.
    
 
   
<TABLE>
<CAPTION>
                                                                 YEAR ENDED
                                                                 JANUARY 31,
                                                                    1997
                                                                 -----------
                                                                 (UNAUDITED,
                                                                     IN
                                                                 THOUSANDS)
<S>                                                              <C>
Pro forma net revenues.........................................   $  62,521
                                                                 -----------
                                                                 -----------
Pro forma net loss.............................................   $ (89,040)
                                                                 -----------
                                                                 -----------
Pro forma net loss per share...................................   $   (1.74)
                                                                 -----------
                                                                 -----------
</TABLE>
    
 
   
    The unaudited pro forma results include the historical operations of the
Company and the historical operations of the acquired businesses adjusted to
reflect the amortization of the excess purchase prices and an increase in
interest expense resulting from additional debt used to finance the
acquisitions. The pro forma results do not include any adjustments for the
Company's proposed initial public offering.
    
 
                                      F-13
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
3. ACQUIRED INTANGIBLE ASSETS
    
 
    Values assigned to acquired in-process research and development,
distribution rights, developed technology, and trademarks and tradenames were
generally determined by independent appraisals using discounted cash flow
analysis. To determine the value of the in-process research and development, the
Company considered, among other factors, the state of development of each
project, the time and cost needed to complete each project, expected income, and
associated risks which included the inherent difficulties and uncertainties in
completing the project and thereby achieving technological feasibility and risks
related to the viability of and potential changes to future target markets. This
analysis results in amounts assigned to in-process research and development
projects that had not yet reached technological feasibility (as defined and
utilized by the Company in assessing software capitalization) and does not have
alternative future uses. To determine the value of the distribution rights, the
Company considered, among other factors, the size of the current and potential
future customer base, quality of existing relationships with customers, the
expected income, and associated risks. Associated risks included the inherent
difficulties and uncertainties in transitioning the business relationships from
the acquired entity to the Company, and risks related to the viability of and
potential changes to future target markets. To determine the value of the
developed technology, the expected future cash flows of each existing technology
product were discounted taking into account risks related to the characteristics
and applications of each product, existing and future markets, and assessments
of the life cycle stage of each product. Based on this analysis, the existing
technology that had reached technological feasibility was capitalized.
 
   
<TABLE>
<CAPTION>
                                                                             JANUARY 31,
                                                                         --------------------
                                                                           1996       1997
                                                                         ---------  ---------
                                                                            (IN THOUSANDS)
<S>                                                                      <C>        <C>
Developed technology and distribution rights...........................  $   8,726  $  22,790
Trademarks and tradenames..............................................        200      3,417
Goodwill...............................................................        933        933
                                                                         ---------  ---------
                                                                             9,859     27,140
Accumulated amortization...............................................     (1,108)    (9,914)
                                                                         ---------  ---------
Acquired intangible assets, net........................................  $   8,751  $  17,226
                                                                         ---------  ---------
                                                                         ---------  ---------
</TABLE>
    
 
                                      F-14
<PAGE>
   
                               BEA SYSTEMS, INC.
    
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
4. PROPERTY AND EQUIPMENT
    
 
   
    Property and equipment consist of the following:
    
 
   
<TABLE>
<CAPTION>
                                                                                 JANUARY 31,
                                                                             --------------------
                                                                               1996       1997
                                                                             ---------  ---------
                                                                                (IN THOUSANDS)
<S>                                                                          <C>        <C>
Computer equipment.........................................................  $     442  $   2,920
Software...................................................................          4      1,013
Furniture and fixtures.....................................................         11      1,576
Vehicles and other.........................................................         38         40
Leasehold improvements.....................................................     --          1,474
Equipment under capital leases.............................................     --          1,154
                                                                             ---------  ---------
                                                                                   495      8,177
Accumulated depreciation and amortization..................................        (39)    (1,529)
                                                                             ---------  ---------
                                                                             $     456  $   6,648
                                                                             ---------  ---------
                                                                             ---------  ---------
</TABLE>
    
 
   
    The accumulated amortization of equipment under capital leases at January
31, 1996 and 1997, was $0 and $154, respectively.
    
 
5. OTHER ASSETS
 
   
    Included in other assets at January 31, 1997 is $1,450,000 invested in bank
certificates of deposit (CDs) at interest rates ranging from 3.90% to 4.25%. The
CDs' support letters of credit that are required as a security deposits under
certain of the Company's facilities leases and other credit arrangements.
    
 
6. LINE OF CREDIT, NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
 
   
LINES OF CREDIT
    
 
   
    At January 31, 1997, the Company had borrowed $9.0 million pursuant to a
revolving line of credit with a commercial lender. The maximum credit available
is $10,000,000 and borrowing availability is based on the aggregate of (i) a
percentage of certain accounts receivable and (ii) $4.0 million. Additional
borrowings available under the line totaled $1.0 million at January 31, 1997.
Borrowings under the credit arrangement bear interest adjusted monthly at the
LIBOR plus 5.125% (10.49% in aggregate at January 31, 1997) and is secured by
substantially all assets of the Company. In addition, the credit agreement
prohibits the Company from paying dividends without the lender's approval. The
credit agreement has a maturity date of April, 1997. However, the lender has
verbally agreed to automatically renew the arrangement through April, 1998 and
allow the Company to borrow up to $10 million regardless of the eligible trade
receivable balance. The credit arrangement was not in place at January 31, 1996.
    
 
   
    The Company has available capital lease lines totaling $999,000 at January
31, 1997, which availability expires June 30, 1997.
    
 
                                      F-15
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. LINE OF CREDIT, NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
 
NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS
 
    Notes payable and capital lease obligations consist of the following:
 
   
<TABLE>
<CAPTION>
                                                                                        JANUARY 31,   JANUARY 31,
                                                                                            1996          1997
                                                                                        ------------  ------------
                                                                                              (IN THOUSANDS)
<S>                                                                                     <C>           <C>
Subordinated notes payable to founders of IMC bearing interest at 8%. Principal and
  interest is payable upon the earlier of a successfully completed public offering of
  the Company's common stock generating net proceeds of at least $20,000,000 or
  September 2000. Accrued interest of $89 and $430 is included at January 31, 1996 and
  1997, respectively..................................................................   $    4,248    $    4,589
 
Note payable to Novell with interest imputed at 8%. The note is due in quarterly
  installments of various amounts totalling $64,550,000, which are guaranteed by the
  majority shareholder of the Company, with a final payment of $12,000,000 due in
  January 1999 upon the Company's exercise of an option to purchase perpetual rights
  to TUXEDO...........................................................................       --            69,900
 
Credit arrangement from the Company's majority stockholder. Borrowings under the
  arrangement are unsecured and bear interest at 11%. The maximum credit available is
  $10 million. The borrowings under the arrangement are convertible, at the option of
  the lender, into shares of Common Stock at the price equal to the borrowings
  outstanding divided by the proceeds per share (net of underwriting commissions)
  received by the Company upon the successful completion of an initial public
  offering. The outstanding borrowings and accrued interest are due upon the earlier
  of the successful completion of an initial public offering or July 22, 1998.........       --             1,000
 
Notes payable to the former shareholders of Bay Technologies Pty., Limited, with
  interest imputed at 8% and is payable in quarterly installments ranging from $107 to
  $123 during the next two years......................................................       --               928
 
Other notes payable, bearing interest ranging from 9%-12% per annum, payable in
  installments through October 31, 1997...............................................           79           299
 
Capital lease obligations.............................................................       --             1,004
                                                                                        ------------  ------------
 
                                                                                              4,327        77,720
 
Less amounts due within one year......................................................          (40)      (28,180)
                                                                                        ------------  ------------
 
Long-term debt and capital obligations due after one year.............................   $    4,287    $   49,540
                                                                                        ------------  ------------
                                                                                        ------------  ------------
</TABLE>
    
 
                                      F-16
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
6. LINE OF CREDIT, NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS (CONTINUED)
   
    Scheduled maturities of notes payable and capital lease obligations are as
follows:
    
 
   
<TABLE>
<CAPTION>
                                                                                    CAPITAL
                                                                         NOTES      LEASES
                                                                        PAYABLE   OBLIGATIONS
                                                                       ---------  -----------
                                                                           (IN THOUSANDS)
<S>                                                                    <C>        <C>
Fiscal year ending January 31,
1998.................................................................  $  27,880   $     422
1999.................................................................     44,199         395
2000.................................................................      4,637         413
                                                                       ---------  -----------
Total................................................................  $  76,716       1,230
                                                                       ---------
                                                                       ---------
Less amount representing interest....................................                   (226)
                                                                                  -----------
Present value of net minimum lease payments..........................                  1,004
Less current portion.................................................                   (300)
                                                                                  -----------
Noncurrent obligations under capital leases..........................              $     704
                                                                                  -----------
                                                                                  -----------
</TABLE>
    
 
   
7. NOTES RECEIVABLE FROM SHAREHOLDERS
    
 
   
    In September 1995, the Company issued 3,050,000 shares of common stock to
certain officers in exchange for, in aggregate, cash of $325,000 and notes
receivable of $544,250. The notes bear interest at 7% compounded semi-annually
and are due upon the earlier of September 28, 2000 or on thirty days or one year
after termination of employment, depending upon the circumstances of the
termination of employment.
    
 
   
    In December 1995, the Company loaned $720,000 to an officer and founder of
the Company for the financing of real property. The note receivable, which is
secured by a deed of trust on the real property, bears interest at 7% per annum
and is due and payable on the earlier of January 1, 2001 or termination of the
founder's employment with the Company. The note may be repaid at any time prior
to the due date.
    
 
   
8. OPERATING LEASE COMMITMENTS
    
 
   
    The Company leases its facilities under operating lease arrangements.
Certain of the leases provide for certain specified annual rent increases as
well as options to extend the lease beyond its initial term. Approximate annual
minimum operating lease commitments are as follows (in thousands):
    
 
   
<TABLE>
<S>                                                                 <C>
Fiscal year ending January 31,
1998..............................................................  $   3,532
1999..............................................................      2,686
2000..............................................................      2,462
2001..............................................................      1,621
2002..............................................................      1,585
Thereafter........................................................      8,248
                                                                    ---------
Total minimum lease payments......................................  $  20,134
                                                                    ---------
                                                                    ---------
</TABLE>
    
 
   
    Total rental expense charged to operations for the years ended January 31,
1996 and 1997 was approximately $184,000, and $3.3 million, respectively.
    
 
                                      F-17
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
9. INCOME TAXES
 
   
    The provisions for income taxes of $60,000 and $800,000 for the years ended
January 31, 1996 and 1997, respectively, represent primarily foreign withholding
taxes for which no U.S. tax benefit is currently recognizable.
    
 
    The reconciliation of income tax attributable to continuing operations
computed at the U.S. federal statutory tax rate (34%) to income tax expense is
as follows (in thousands):
 
   
<TABLE>
<CAPTION>
                                                                    JANUARY 31,   JANUARY 31,
                                                                        1996          1997
                                                                    ------------  ------------
<S>                                                                 <C>           <C>
Tax credit at U.S. statutory rate.................................   $   (6,011)   $  (29,874)
Nondeductible amortization of intangibles.........................        1,770        11,842
Valuation allowance...............................................        4,241        18,304
Foreign withholding taxes, net....................................           60           528
                                                                    ------------  ------------
                                                                             60           800
                                                                    ------------  ------------
                                                                    ------------  ------------
</TABLE>
    
 
    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets for federal and state income taxes are as
follows (in thousands):
 
   
<TABLE>
<CAPTION>
                                                                          1996        1997
                                                                       ----------  ----------
<S>                                                                    <C>         <C>
Deferred tax assets:
  Net operating loss carryforwards...................................  $    1,545  $    7,279
  Deferred revenue...................................................         468          82
  Accruals and reserves..............................................         580       3,193
  Property and equipment and intangible assets.......................       2,549      17,547
                                                                       ----------  ----------
      Total deferred tax assets......................................       5,142      28,101
Valuation allowance..................................................      (5,142)    (28,101)
                                                                       ----------  ----------
Net deferred tax assets..............................................  $   --      $   --
                                                                       ----------  ----------
                                                                       ----------  ----------
</TABLE>
    
 
   
    Realization of deferred tax assets is dependent on future taxable income,
the timing and amount of which are uncertain. Accordingly, a valuation
allowance, in an amount equal to the net deferred tax assets at January 31, 1996
and 1997, has been established to reflect these uncertainties. The valuation
allowance increased by $22,959,000 in the year ended January 31, 1997.
Approximately $728,000 of the valuation allowance at January 31, 1996 and 1997
relates to acquired net operating loss carryforwards, the benefit of which will
be credited to intangible assets when realized.
    
 
   
    As of January 31, 1996 and 1997, the Company had net operating loss
carryforwards for federal tax purposes of approximately $4,100,000 and
$19,800,000, respectively, that will expire from 2010 through 2012. The Company
also has state net operating loss carryforwards at January 31, 1996 and 1997 of
approximately $2,300,000 and $8,900,000, respectively, expiring from 2000
through 2002. Utilization of net operating loss carryforwards may be subject to
substantial limitations due to the ownership change and other limitations
provided by the Internal Revenue Code and similar state provisions. These
limitations may result in the expiration of net operating loss carryforwards
before full utilization.
    
 
                                      F-18
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
10. SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK
 
   
    Holders of Series B Redeemable Convertible Preferred Stock (the "Series B
Stock") are entitled to annual dividends, when and if declared by the Board of
Directors, of $0.07 per share, payable prior and in preference to any
declaration or payment of any dividend on the Series A Convertible Preferred
Stock (the "Series A Stock") and the Common Stock. The right to receive such
dividends are cumulative and will accrue to the extent that such dividends are
not declared or paid in any year. No dividends have been declared or paid by the
Company on the Series B Stock. Total accumulated dividends on the Series B Stock
were approximately $932,000 at January 31, 1997.
    
 
    In the event of liquidation of the Company, holders of Series B Stock are
entitled to receive a liquidation preference of $1.00 per share, plus all
accumulated but unpaid dividends, prior and in preference to any payments made
to holders of Series A Stock and common stock. The Series B Stock carries no
voting rights.
 
    Each share of Series B Stock is convertible, at the option of the holder,
into that number of shares of common stock obtained by dividing the amount
payable to such holder in the event of liquidation by the fair value of the
Company's common stock, as determined by the Board of Directors, or, in the
event of a conversion in connection with an initial public offering, by the per
share initial public offering price, net of underwriting commissions.
 
    Each holder of Series B Stock has the right, exercisable at any time
following September 30, 2001, to require the Company to redeem all or a portion
of such holder's Series B Stock for $1.00 per share, plus accumulated and unpaid
dividends (the "Redemption Price"). However, upon the closing of an initial
public offering of the Company's common stock at an offering price of not less
than $5.00 per share and gross proceeds to the Company of at least $10,000,000,
each share of Series B Stock will be redeemed for the Redemption Price unless
converted, at the option of the holder, into shares of common stock of the
Company. Additionally, the Company may, at its option, redeem at any time any or
all of the outstanding shares of the Series B Stock at the Redemption Price.
 
11. STOCKHOLDERS' EQUITY
 
CONVERTIBLE PREFERRED STOCK
 
    Series A Stock holders are entitled to noncumulative annual dividends, when
and if declared by the Board of Directors, of $0.12 per share, payable in
preference to common stock dividends, but after all cumulative dividends payable
with respect to the Series B Stock have been declared and paid. No dividends
have been declared or paid by the Company on the Series A Stock.
 
    In the event of liquidation of the Company, Series A Stock holders are
entitled to receive a liquidation preference of $1.70 per share, plus all
declared but unpaid dividends, after payment of the full liquidation preference
has been made on the Series B Stock prior and in preference to any payments made
to holders of common stock.
 
    Each share of Series A Stock votes equally with shares of common stock on an
"if-converted" basis. Each share of Series A Stock is convertible at any time at
the option of the shareholder into two shares of common stock. The conversion
ratio is subject to upward adjustment upon the occurrence of certain events.
Upon conversion, all declared and unpaid dividends will be paid in cash. Each
share of Series A Stock automatically converts into common stock at the
then-effective conversion rate in the event of an underwritten initial public
offering of the Company's common stock at an offering price of not less than
 
                                      F-19
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. STOCKHOLDERS' EQUITY (CONTINUED)
$5.00 per share and gross proceeds to the Company of at least $10,000,000, or
upon the written consent of two-thirds of the then outstanding Series A Stock.
 
COMMON STOCK REPURCHASE RIGHTS
 
   
    The Company has stock repurchase agreements with certain individuals
whereby, if the stockholder ceases to be a consultant or employee of the
Company, the Company has the right to repurchase the stock at the original
issuance price. Such repurchase rights generally lapse over four to five years
from the original date of issuance. Certain of the repurchase rights lapse upon
the successful completion of an initial public offering. Common stock subject to
repurchase totaled 5,889,964 shares with an aggregate repurchase price of
$23,127,606 as of January 31, 1997. Series A Stock subject to repurchase at
January 31, 1997 was 100,000 shares at an aggregate price of $170,000.
    
 
COMMON STOCK RESERVED FOR FUTURE ISSUANCE
 
   
    At January 31, 1997, the Company had reserved shares of common stock for
future issuance as follows:
    
 
   
<TABLE>
<S>                                                              <C>
Conversion of Series A convertible preferred stock.............  34,332,000
1995 Flexible Stock Incentive Plan.............................   9,026,213
</TABLE>
    
 
   
    In addition, the Company has reserved sufficient shares of common stock for
the conversion of Series B redeemable convertible preferred stock and borrowings
outstanding under the credit arrangement with the Company's majority
stockholder.
    
 
STOCK OPTION PLAN
 
    The Company has elected to follow APB 25 and related interpretations in
accounting for its employee stock options because, as discussed below, the
alternative fair value accounting provided for under FAS 123, requires use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on the
date of grant, no compensation expense is recorded.
 
    The fair value option valuation models were developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly speculative assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
 
   
    Pro forma information regarding net income and earnings per share is
required by FAS 123 which also requires that the information be determined as if
the Company has accounted for its employee stock options granted subsequent to
December 31, 1994 under the fair value method of that statement. The fair value
for these options was estimated at the date of grant using a minimum
value-pricing model with a risk free interest rate of 5.0%, no dividend yield
and an estimated life of 48 months. The effect of applying the minimum value
method to the stock option activity did not result in pro forma net loss and
loss per share that are materially different from historical amounts reported.
Therefore, such pro forma information is not separately presented herein. Future
pro forma net income or loss and earnings or loss
    
 
                                      F-20
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. STOCKHOLDERS' EQUITY (CONTINUED)
   
per share may be materially different from actual amounts reported. The Company
will not use the minimum value-pricing model when granting options when the
Company becomes a public company.
    
 
   
    The Company's 1995 Flexible Stock Incentive Plan (the "Plan") provides for
the grant of incentive and nonstatutory stock options, as determined by the
Board of Directors. Options are generally granted at an exercise price of not
less than the fair value per share of the common stock on the date of grant. The
vesting and exercise provision are determined by the Board of Directors with a
maximum term of ten years. Options granted under the Plan are immediately
exercisable and generally vest over a four-year period with 25% vesting after
one year and 2.08% each month thereafter. Unvested shares are subject to
repurchase by the Company. There were 404,959 shares vested at January 31, 1997,
at an average exercise price of $0.285. At January 31, 1997, 2,344,925 shares of
common stock were reserved for future grants under the Plan. The Plan also
provides for the sale or bonus of common stock to eligible individuals in
connection with the performance of services for the Company. During the year
ended January 31, 1997, the Company issued under the Plan 70,000 shares of
Common Stock, respectively, as payment for services.
    
 
    Information with respect to option activity in the Plan is summarized as
follows:
 
   
<TABLE>
<CAPTION>
                                                                                                        WEIGHTED
                                                                           OPTIONS         PRICE         AVERAGE
                                                                         OUTSTANDING     PER SHARE        PRICE
                                                                         ------------  --------------  -----------
<S>                                                                      <C>           <C>             <C>
Balance at January 20, 1995............................................       --                        $  --
  Granted..............................................................    2,344,200    $.01 - $.285    $   0.273
  Exercised............................................................     (100,000)      $0.01        $   0.010
                                                                         ------------
Balance at January 31, 1996............................................    2,244,200                    $   0.285
  Granted..............................................................    4,016,550       $0.285       $   0.285
                                                                             186,750       $1.000       $   1.000
                                                                             235,500       $2.000       $   2.000
                                                                             452,525       $4.000       $   4.000
                                                                             476,925       $6.000       $   6.000
  Exercised............................................................     (403,787)      $0.285       $   0.285
  Forfeited............................................................     (527,375)      $0.655       $   0.655
                                                                         ------------
Balance at January 31, 1997............................................    6,681,288                    $   0.996
                                                                         ------------
                                                                         ------------
</TABLE>
    
 
   
    The assumed weighted average remaining contractual life of options at
January 31, 1997 is as follows:
    
 
   
<TABLE>
<CAPTION>
         OUTSTANDING OPTIONS
- -------------------------------------
                    WEIGHTED
                AVERAGE REMAINING
  PRICE            CONTRACTUAL
PER SHARE          LIFE MONTHS
- ----------  -------------------------
<S>         <C>
    $0.285                107
     $1.00                115
     $2.00                116
     $4.00                117
     $6.00                119
</TABLE>
    
 
   
    The weighted average fair value of options granted in fiscal 1996 and 1997
was $.273 and $1.37, respectively.
    
 
                                      F-21
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
11. STOCKHOLDERS' EQUITY (CONTINUED)
   
    The Company has recorded deferred compensation of $973,000 for the
difference between the grant price and the deemed fair value of certain of the
Company's common stock options granted in the year ended January 31, 1997. This
amount is being amortized over the vesting period of the individual options,
generally four years. Compensation expense recognized in the year ended January
31, 1997 totaled $128,000 and at January 31, 1997, deferred compensation totaled
$845,000.
    
 
UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY
 
   
    Unaudited pro forma stockholders' equity at January 31, 1997 gives effect to
the conversion of all shares of Series A Stock into common stock upon the close
of the Company's initial public offering as well as the conversion based on an
assumed initial public offering price, of all shares of Series B Stock and
amounts outstanding at January 31, 1997 under the credit arrangement with the
Company's majority stockholder, as the holder has indicated intent to convert
such shares and outstanding amounts under the credit arrangement upon the close
of the Company's initial public offering.
    
 
   
INITIAL PUBLIC OFFERING
    
 
   
    In January 1997, the Board of Directors authorized management of the Company
to file a registration statement with the SEC, offering its common stock to the
public.
    
 
12. INDUSTRY AND GEOGRAPHIC SEGMENT INFORMATION
 
   
    The Company operates in one industry segment (the development and marketing
of computer software and related services) and markets its products and services
internationally through subsidiaries in Europe and Asia, and through independent
distributors and resellers located worldwide. Export sales totaled $553,000 for
the year ended January 31, 1996 and $3.2 million for the year ended January 31,
1997. Transfers between geographic areas are accounted for at estimated amounts
which are generally above cost. Such transfers are eliminated in the
consolidated financial statements. Identifiable assets
    
 
                                      F-22
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
12. INDUSTRY AND GEOGRAPHIC SEGMENT INFORMATION (CONTINUED)
are those assets that can be directly associated with a particular geographic
area. The following is a summary of operations within geographic areas.
 
   
<TABLE>
<CAPTION>
                                                                                      YEAR ENDING
                                                                                      JANUARY 31,
                                                                                 ----------------------
                                                                                    1996        1997
                                                                                 ----------  ----------
<S>                                                                              <C>         <C>
Revenues from unaffiliated customers
  United States................................................................  $    5,133  $   40,182
  Europe.......................................................................      --          17,922
  Asia and other...............................................................      --           3,494
                                                                                 ----------  ----------
    Total revenues.............................................................  $    5,133  $   61,598
                                                                                 ----------  ----------
                                                                                 ----------  ----------
Income (loss) from operations
  United States................................................................  $  (17,740) $  (78,328)
  Europe.......................................................................      --            (874)
  Asia and other...............................................................      --          (1,940)
                                                                                 ----------  ----------
    Total income (loss) from operations........................................  $  (17,740) $  (81,142)
                                                                                 ----------  ----------
                                                                                 ----------  ----------
Identifiable assets (at end of year)
  United States................................................................  $   18,953  $   41,348
  Europe.......................................................................      --          13,041
  Asia and other...............................................................      --           3,584
                                                                                 ----------  ----------
    Total identifiable assets..................................................  $   18,953  $   57,973
                                                                                 ----------  ----------
                                                                                 ----------  ----------
</TABLE>
    
 
   
13. TRANSACTION WITH DIGITAL EQUIPMENT CORPORATION ("DIGITAL")
    
 
   
    On January 31, 1997, the Company entered into an agreement with Digital to
acquire exclusive worldwide rights to MessageQ, ObjectBroker and other related
products from Digital for an aggregate consideration of $22 million. The Company
currently anticipates that the Digital transaction will close on or about March
26, 1997. Of the aggregate consideration for the products, $5 million is payable
in cash ($3 million of which will be due on June 20, 1997 and $2 million of
which will be due on the earlier of June 20, 1997 or 10 days after the purchase
by Digital of $2 million worth of Common Stock offered hereby), and $17 million
is payable by delivery of a $17 million non-interest bearing convertible
promissory note. The promissory note provides for installments of $2 million, $4
million and $11 million payable on or before February 1, 1998, 1999 and 2000,
respectively, and may be converted into shares of the Company's Common Stock at
the option of Digital at a conversion price of 1.5 times, 1.8 times and 2.5
times the initial public offering price, respectively; provided, however, that
only $5 million of such $11 million is convertible. In addition, the Company has
granted Digital warrants to purchase $3 million worth of Common Stock at a price
equal to the initial public offering price exercisable for the period beginning
180 days after the date of this offering and expiring one year thereafter. The
closing of the Digital transaction is subject to certain conditions, and no
assurance can be made that such transaction will be consummated and that the
various Digital products will be acquired by the Company.
    
 
                                      F-23
<PAGE>
                               BEA SYSTEMS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
   
14. SUBSEQUENT EVENTS
    
 
   
    On March 19, 1997, the Company's Board of Directors authorized, subject to
stockholder approval, 35,000,000 shares of an additional class of common stock
("Class B Common Stock"), and amended the terms of conversion of the shares of
Series A and Series B Preferred Stock. Assuming conversion into Common Stock or
Class B Common Stock of all outstanding shares of Series A and Series B
Preferred Stock, approximately 29.4 million shares of Class B Common Stock will
be issued upon conversion of certain shares of Series A Preferred Stock and all
shares of Series B Preferred Stock at or prior to the closing of the Company's
initial public offering. All outstanding shares of Class B Common Stock will be
held by the Company's majority stockholder. The Class B Common Stock has the
same rights, preferences, privileges and restrictions as the Common Stock,
except that the Class B Common Stock is convertible into Common Stock, has no
voting rights except as required by Delaware law and has no right to vote for
the election of directors. The shares of Class B Common Stock will, upon any
transfer of such shares, be automatically converted into a like number of shares
of Common Stock, subject to adjustment upon certain events with respect to the
Common Stock. The shares of Class B Common Stock are also convertible at the
option of the holder thereof into Common Stock, so long as such conversion
results in the stockholder holding equal to or less than 49% of the Company's
outstanding voting securities.
    
 
   
    On March 19, 1997, the Company's Board of Directors adopted, subject to
stockholder approval, the 1997 Stock Option Plan under which the Company is
initially authorized to grant up to 5,100,000 stock options with similar terms
to the 1995 Flexible Stock Incentive Plan. The Company will not grant additional
stock options under the 1995 Flexible Stock Incentive Plan subsequent to the
effective date of the 1997 Stock Option Plan.
    
 
   
    In addition, on March 19, 1997, the Company's Board of Directors adopted,
subject to stockholder approval, the 1997 Employee Stock Purchase Plan under
which an aggregate of 1,250,000 shares of Common Stock will be reserved.
    
 
                                      F-24
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors
Information Management Company
 
    We have audited the accompanying balance sheets of Information Management
Company as of December 31, 1994 and September 29, 1995, and the related
statements of operations and retained earnings (deficit) and cash flows for the
year and nine months then ended, respectively. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Information Management
Company at December 31, 1994 and September 29, 1995, and the results of its
operations and its cash flows for the year and nine months then ended,
respectively, in conformity with generally accepted accounting principles.
 
                                          Ernst & Young LLP
 
MetroPark, New Jersey
January 10, 1997
 
                                      F-25
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
                                 BALANCE SHEETS
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                    DECEMBER 31,   SEPTEMBER 29,
                                                                                        1994            1995
                                                                                   --------------  --------------
 
<S>                                                                                <C>             <C>
Current assets:
  Cash and cash equivalents......................................................   $     30,783    $    --
  Accounts receivable, less allowance for doubtful accounts of $49,000 in 1994
    and $200,000 in 1995.........................................................      1,255,269       1,334,324
  Prepaid expenses and other current assets......................................         13,419          47,414
                                                                                   --------------  --------------
Total current assets.............................................................      1,299,471       1,381,738
 
Property and equipment, net......................................................         54,936          56,402
                                                                                   --------------  --------------
                                                                                    $  1,354,407    $  1,438,140
                                                                                   --------------  --------------
                                                                                   --------------  --------------
                                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
Current liabilities:
  Cash overdraft.................................................................   $    --         $    123,380
  Line of credit.................................................................        --              522,123
  Accounts payable...............................................................         37,223         259,071
  Accrued compensation and related payroll liabilities...........................        213,804         107,656
  Accrued royalties..............................................................        310,102         154,545
  Accrued sales taxes............................................................        350,000         600,000
  Other accrued liabilities......................................................         55,676         112,298
  Deferred revenue...............................................................        334,126         505,133
                                                                                   --------------  --------------
Total current liabilities........................................................      1,300,931       2,384,206
 
Commitments
 
Stockholders' equity (deficit):
  Common stock, no par value, 1,500 shares authorized, issued and outstanding....            200             200
  Retained earnings (deficit)....................................................         53,276        (946,266)
                                                                                   --------------  --------------
Total stockholders' equity (deficit).............................................         53,476        (946,066)
                                                                                   --------------  --------------
                                                                                    $  1,354,407    $  1,438,140
                                                                                   --------------  --------------
                                                                                   --------------  --------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-26
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
            STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (DEFICIT)
 
<TABLE>
<CAPTION>
                                                                                                    NINE MONTHS
                                                                                     YEAR ENDED        ENDED
                                                                                    DECEMBER 31,   SEPTEMBER 29,
                                                                                        1994            1995
                                                                                   --------------  --------------
<S>                                                                                <C>             <C>
Revenues:
  License........................................................................   $  4,365,735    $  2,753,789
  Service........................................................................      1,069,221       1,858,759
                                                                                   --------------  --------------
Total revenues...................................................................      5,434,956       4,612,548
 
Cost of revenues:
  License........................................................................      1,623,565         734,233
  Service........................................................................        887,296       1,407,760
                                                                                   --------------  --------------
Total cost of revenues...........................................................      2,510,861       2,141,993
                                                                                   --------------  --------------
Gross profit.....................................................................      2,924,095       2,470,555
 
Operating expenses:
  Research and development.......................................................        111,504         726,615
  Sales and marketing............................................................      1,513,185       1,223,783
  General and administrative.....................................................        996,411       1,505,275
                                                                                   --------------  --------------
Total operating expenses.........................................................      2,621,100       3,455,673
                                                                                   --------------  --------------
 
Income (loss) from operations....................................................        302,995        (985,118)
 
Interest expense.................................................................         22,634          12,543
Other expense....................................................................            691           1,881
                                                                                   --------------  --------------
Net income (loss)................................................................        279,670        (999,542)
 
Retained earnings (deficit) at beginning of period...............................       (226,394)         53,276
                                                                                   --------------  --------------
Retained earnings (deficit) at end of period.....................................   $     53,276    $   (946,266)
                                                                                   --------------  --------------
                                                                                   --------------  --------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-27
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
                            STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                                                    NINE MONTHS
                                                                                     YEAR ENDED        ENDED
                                                                                    DECEMBER 31,   SEPTEMBER 29,
                                                                                        1994            1995
                                                                                   --------------  --------------
<S>                                                                                <C>             <C>
OPERATING ACTIVITIES
Net income (loss)................................................................   $    279,670    $   (999,542)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
  operating activities:
  Depreciation and amortization..................................................            768          44,746
  Changes in assets and liabilities:
    Accounts receivable, net.....................................................     (1,014,717)        (79,055)
    Prepaid expenses and other current assets....................................         14,325         (33,995)
    Accounts payable and accrued expenses........................................         26,927         172,322
    Deferred revenue.............................................................        250,276         171,007
    Royalties payable............................................................        310,102        (155,557)
    Sales taxes payable..........................................................        350,000         250,000
                                                                                   --------------  --------------
Net cash provided by (used in) operating activities..............................        217,351        (630,074)
 
INVESTING ACTIVITIES
Purchases of property and equipment..............................................        (47,362)        (46,212)
                                                                                   --------------  --------------
Net cash used in investing activities............................................        (47,362)        (46,212)
                                                                                   --------------  --------------
 
FINANCING ACTIVITIES
Borrowing under line of credit...................................................      1,341,627       1,646,015
Payments on line of credit.......................................................     (1,481,949)     (1,123,892)
Cash overdraft...................................................................                        123,380
                                                                                   --------------  --------------
Net cash (used in) provided by financing activities..............................       (140,322)        645,503
                                                                                   --------------  --------------
 
Net increase (decrease) in cash and cash equivalents.............................         29,667         (30,783)
Cash and cash equivalents at beginning of period.................................          1,116          30,783
                                                                                   --------------  --------------
Cash and cash equivalents at end of period.......................................   $     30,783    $    --
                                                                                   --------------  --------------
                                                                                   --------------  --------------
 
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest.........................................   $     22,634    $     12,543
                                                                                   --------------  --------------
                                                                                   --------------  --------------
</TABLE>
 
                            See accompanying notes.
 
                                      F-28
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
                         NOTES TO FINANCIAL STATEMENTS
 
                               SEPTEMBER 29, 1995
 
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
DESCRIPTION OF BUSINESS
 
    Information Management Company (the "Company") was incorporated in the state
of Delaware in July 1990 and is located in Liberty Corner, New Jersey. The
Company is engaged in providing standards-based, enterprise-wide client/server
products and services.
 
    Effective September 30, 1995, the Company was purchased by BEA Systems, Inc.
("BEA"); (see Note 7). The accompanying financial statements have been prepared
on the Company's historical cost basis, and do not reflect any adjustments
resulting from the acquisition.
 
REVENUE RECOGNITION
 
    Revenues from end user software license agreements are recognized at the
time of product shipment, provided there are no vendor obligations remaining to
be fulfilled and collectibility is probable. License fees from resellers are
also recognized as revenue when the software has been shipped, provided that no
significant vendor obligations remain to be fulfilled, certain customer criteria
established by the Company have been met, and the fees are payable within twelve
months.
 
    Services revenues include consulting services, post-contract customer
support, and training. Consulting revenues and the related cost of these
revenues are recognized on a time and materials basis. Support revenues are
recognized pro rata over the term of the service period and training or other
revenues are recognized as the related services are provided. The unrecognized
portion of amounts billed or paid in advance for such services is reported as
deferred revenues.
 
CASH EQUIVALENTS
 
    The Company considers all highly liquid short-term investments with original
maturities of 90 days or less when purchased to be cash equivalents.
 
CONCENTRATION OF CREDIT RISK
 
    The Company sells its products to customers, typically large corporations,
in a variety of industries, primarily in North America. The Company performs
ongoing credit evaluations of its customers and generally does not require
collateral. The Company maintains reserves for potential credit losses and such
losses have been within management's expectations.
 
PROPERTY AND EQUIPMENT
 
    Property and equipment are stated at cost. Depreciation and amortization are
computed using the double-declining balance method.
 
    The estimated useful lives used in computing depreciation are as follows:
 
<TABLE>
<S>                                                        <C>
Machinery and equipment..................................  3-5 years
Furniture and fixtures...................................    7 years
Leasehold improvements...................................   10 years
Vehicles.................................................    5 years
</TABLE>
 
                                      F-29
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                               SEPTEMBER 29, 1995
 
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
 
    The Company has elected, with the consent of its shareholders, to be treated
as an S Corporation under the Internal Revenue Code. The shareholder of an S
Corporation includes the Company's income in its own income for income tax
purposes. Accordingly, no federal income taxes are provided for in the
accompanying financial statements. Effective January 1, 1995, the Company has
also elected S Corporation status under the applicable sections of the New
Jersey income tax laws.
 
USE OF ESTIMATES
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
 
RESEARCH AND DEVELOPMENT
 
    Research and development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,"
requires the capitalization of certain software development costs subsequent to
the establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon the
completion of a working model. Costs incurred by the Company between the
completion of the working model and the point at which the product is ready for
general release have been insignificant. Accordingly, the Company has charged
all such costs to research and development expenses in the accompanying
statements of operations.
 
PRODUCT CONCENTRATION
 
    The Company derives the majority of its revenue from the licensing of
products in the TUXEDO product line, to which the Company has certain
distribution rights from Novell Inc. ("Novell"), and fees from related services.
These products and services are expected to continue to account for a majority
of the Company's revenue for the foreseeable future. Consequently, a reduction
in demand or an increase in competition for these products due to market factors
or a decline in sales of such products would affect operating results adversely.
 
    During the year ended December 31, 1994 and the nine months ended September
29, 1995, the amount of royalties due to Novell totalled $982,500 and $687,440,
respectively, and are included in cost of sales in the accompanying statements
of operations.
 
                                      F-30
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                               SEPTEMBER 29, 1995
 
2. TRANSACTIONS WITH SIGNIFICANT CUSTOMERS
 
    Customers that comprise greater than 10% of the Company's total revenues in
the periods presented are as follows:
 
<TABLE>
<CAPTION>
                                                               YEAR ENDED      NINE MONTHS ENDED
                                                              DECEMBER 31,       SEPTEMBER 29,
                                                                  1994               1995
                                                            -----------------  -----------------
<S>                                                         <C>                <C>
Customer A................................................            22%                10%
Customer B................................................            15%             --
Customer C................................................         --                    12%
</TABLE>
 
    Revenues generated from these customers were less than 10% of total revenue
in the periods where percentages are not shown.
 
3. PROPERTY AND EQUIPMENT
 
    The components of property and equipment at December 31, 1994 and September
29, 1995 are as follows:
 
<TABLE>
<CAPTION>
                                                                         1994        1995
                                                                       ---------  -----------
<S>                                                                    <C>        <C>
Machinery and equipment..............................................  $  60,012  $    82,558
Furniture and fixtures...............................................     14,486       18,685
Leasehold improvements...............................................      9,112       21,578
Vehicles.............................................................      1,060        8,061
                                                                       ---------  -----------
                                                                          84,670      130,882
Less accumulated depreciation and amortization.......................     29,734       74,480
                                                                       ---------  -----------
                                                                       $  54,936  $    56,402
                                                                       ---------  -----------
                                                                       ---------  -----------
</TABLE>
 
4. LINE OF CREDIT
 
    In March 1995, the Company entered into an accounts receivable revolving
loan facility with a bank with availability up to $750,000 and renewable
annually. Borrowings are limited to the borrowing base (as defined); however,
the full amount of the facility was available to the Company at September 29,
1995. Advances bear interest at 1.5% above the bank's floating base rate (8% at
September 29, 1995), and the Company is required to pay a fee for the unused
portion equal to .5%, payable quarterly and calculated monthly. Borrowings under
the facility is secured by substantially all assets of the Company and is
personally guaranteed by the principal stockholders.
 
    Management estimates that the carrying value of the revolving loan facility
approximates its fair value.
 
    During 1994, the Company maintained a line of credit with another bank in
the amount of $350,000. This line was increased to $550,000 in January 1995
before it was replaced with the facility discussed above.
 
                                      F-31
<PAGE>
                         INFORMATION MANAGEMENT COMPANY
 
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)
 
                               SEPTEMBER 29, 1995
 
5. LEASES
 
    The Company leases its operating facility, certain equipment and vehicles
under noncancellable operating leases that expire in 1997. The leases provide
for all real estate taxes and operating expenses to be paid by the Company.
Under the lease of the operating facility, the Company has the option to renew
for additional terms at specified rentals. Minimum future rental payments under
such leases as of September 29, 1995 are as follows:
 
<TABLE>
<S>                                                        <C>
Three months ending December 31, 1995....................  $  79,851
Year ending December 31, 1996............................    308,779
Year ending December 31, 1997............................    178,396
                                                           ---------
Total minimum future rental payments.....................  $ 567,026
                                                           ---------
                                                           ---------
</TABLE>
 
    Total rent expense charged to operations was $107,600 and $184,221, during
the year ended December 31, 1994 and the nine months ended September 29, 1995,
respectively.
 
6. GENERAL AND ADMINISTRATIVE EXPENSES
 
    During the nine months ended September 29, 1995, the Company incurred
various professional fees in conjunction with negotiations for the sale of the
Company to prospective buyers, including BEA (see Note 7). These fees totaled
$213,000 for the period and are included in general and administrative expenses
in the accompanying statement of operations.
 
7. SUBSEQUENT EVENT
 
    Effective September 30, 1995, the Company was purchased by BEA, a company
which develops and markets middleware solution platforms. The purchase price,
excluding liabilities assumed and direct acquisition costs, was $10,010,000 of
which $7,280,000 was paid in cash at the closing and $2,730,000 is payable
through the issuance of a subordinated promissory note. The interest rate on
this note is 8%.
 
                                      F-32
<PAGE>
               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
The Board of Directors
BEA Systems, Inc.
 
    We have audited the accompanying statements of operations and cash flows of
Independence Technologies, Inc. for the period from January 1, 1995 to November
1, 1995. These statements of operations and cash flows are the responsibility of
BEA Systems, Inc.'s management. Our responsibility is to express an opinion on
these statements of operations and cash flows based on our audit.
 
    We conducted our audit in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statements of operations and cash flows
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statements of operations
and cash flows. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
presentation of the statements of operations and cash flows. We believe that our
audit provides a reasonable basis for our opinion.
 
    The accompanying statements of operations and cash flows were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form SB-2 of
BEA Systems, Inc. as described in Note 1, and are not intended to be a complete
presentation of the financial position and results of operations of Independence
Technologies, Inc.
 
    In our opinion, the statements of operations and cash flows referred to
above present fairly, in all material respects, the results of operations and
cash flow of Independence Technologies, Inc. for the period from January 1, 1995
to November 1, 1995, in conformity with generally accepted accounting
principles.
 
                                          Ernst & Young LLP
 
San Jose, California
January 20, 1997
 
                                      F-33
<PAGE>
                        INDEPENDENCE TECHNOLOGIES, INC.
 
                            STATEMENT OF OPERATIONS
            FOR THE PERIOD FROM JANUARY 1, 1995 TO NOVEMBER 1, 1995
 
<TABLE>
<S>                                                                              <C>
Revenues:
  License......................................................................  $ 3,756,574
  Service......................................................................    1,960,103
                                                                                 -----------
    Total revenues.............................................................    5,716,677
                                                                                 -----------
Cost of revenues:
  License......................................................................    1,188,482
  Service......................................................................    1,239,911
                                                                                 -----------
    Total cost of revenues.....................................................    2,428,393
                                                                                 -----------
Gross profit...................................................................    3,288,284
Operating expenses:
  Research and development.....................................................    1,493,622
  Sales and marketing..........................................................    1,777,710
  General and administrative...................................................    1,290,768
                                                                                 -----------
    Total operating expenses...................................................    4,562,100
                                                                                 -----------
 
Loss from operations...........................................................   (1,273,816)
 
  Interest income..............................................................       15,693
  Interest expense.............................................................      (31,382)
                                                                                 -----------
 
Loss before extraordinary item.................................................   (1,289,505)
 
Extraordinary item--forgiveness of debt........................................    1,035,000
                                                                                 -----------
 
Net loss.......................................................................  $  (254,505)
                                                                                 -----------
                                                                                 -----------
</TABLE>
 
                            See accompanying notes.
 
                                      F-34
<PAGE>
   
                        INDEPENDENCE TECHNOLOGIES, INC.
                            STATEMENT OF CASH FLOWS
            FOR THE PERIOD FROM JANUARY 1, 1995 TO NOVEMBER 1, 1995
    
 
<TABLE>
<CAPTION>
OPERATING ACTIVITIES
<S>                                                                              <C>
Net loss.......................................................................  $  (254,505)
Adjustments to reconcile net income to net cash provided by operating
 activities:
  Depreciation and amortization................................................      365,417
  Gain on forgiveness of debt..................................................   (1,035,000)
  Changes in assets and liabilities:
    Accounts receivable........................................................       33,711
    Prepaid expenses and other current assets..................................       61,126
    Accounts payable...........................................................      236,063
    Accrued liabilities........................................................      714,529
                                                                                 -----------
Net cash provided by operating activities......................................      121,341
                                                                                 -----------
INVESTING ACTIVITIES
Acquisition of property and equipment..........................................      (88,963)
Advances to stockholders.......................................................       (2,621)
                                                                                 -----------
Net cash used in investing activities..........................................      (91,584)
                                                                                 -----------
FINANCING ACTIVITIES
Repayments of long-term debt...................................................      (14,433)
Payments on capital lease obligations..........................................      (13,905)
Net proceeds from issuance of common stock and warrants........................       48,312
                                                                                 -----------
Net cash provided by financing activities......................................       19,974
 
Net increase in cash...........................................................       49,731
Cash, beginning of period......................................................      250,508
                                                                                 -----------
Cash, end of period............................................................  $   300,239
                                                                                 -----------
                                                                                 -----------
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest.......................................  $    18,216
                                                                                 -----------
                                                                                 -----------
Conversion of debt to common stock.............................................  $ 2,466,536
                                                                                 -----------
                                                                                 -----------
</TABLE>
 
                            See accompanying notes.
 
                                      F-35
<PAGE>
                        INDEPENDENCE TECHNOLOGIES, INC.
 
                NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS
 
            FOR THE PERIOD FROM JANUARY 1, 1995 TO NOVEMBER 1, 1995
 
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
DESCRIPTION OF BUSINESS
 
    Independence Technologies, Inc. (the "Company") which was incorporated in
July 1988 provides object-oriented software, programming products, and
consulting services primarily for large, distributed on-line transaction
processing applications based on the UNIX operating system. The Company also
acts as a distributor of certain third party software products.
 
BASIS OF PRESENTATION
 
    On November 1, 1995, the Company was acquired by Information Management
Company ("IMC"), a wholly owned subsidiary of BEA Systems, Inc. ("BEA") for
approximately $7,266,000 in cash and the assumption of certain liabilities. The
accompanying financial statements have been prepared on the Company's historical
cost basis, and do not reflect any adjustments resulting from the acquisition.
 
    The accompanying statements of operations and cash flows were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the registration statement on Form-SB-2 of
BEA and are not intended to be a complete presentation of the financial position
and results of operations of Independence Technologies, Inc.
 
USE OF ESTIMATES
 
    The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
 
CONCENTRATION OF CREDIT RISK
 
    The Company sells its products to customers, typically large corporations,
in a variety of industries. The Company performs ongoing credit evaluations of
its customers and generally does not require collateral. The Company maintains
reserves for potential credit losses and such losses have been within
management's expectations.
 
REVENUE RECOGNITION
 
    Revenues from end user software license agreements and license fees from
third-party distributors and value-added resellers are recognized at the time of
product shipment, provided there are no significant vendor obligations remaining
to be fulfilled and collectibility is probable. Consulting revenues and the
related costs are generally recognized on a time and materials basis; however,
certain fixed price contracts are recognized on the percentage of completion
basis which involves the use of estimates. Actual results could differ from
those estimates and, as a result, future profitability on such contracts may be
more or less than estimated. The amount of consulting contracts recognized on a
percentage of completion basis has not been material to date. Support revenues
are recognized prorata over the term of the service period. Training and other
service revenues are recognized as the related services are performed. The
unrecognized portion of amounts paid for such consulting, support, and other
services is reported as deferred revenues.
 
                                      F-36
<PAGE>
                        INDEPENDENCE TECHNOLOGIES, INC.
 
          NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (CONTINUED)
 
            FOR THE PERIOD FROM JANUARY 1, 1995 TO NOVEMBER 1, 1995
 
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROPERTY AND EQUIPMENT
 
    Property and equipment are recorded at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets ranging
from three to seven years. Assets under capital leases and leasehold
improvements are amortized over the shorter of the asset life or the remaining
lease term. The related amortization expense is included in depreciation
expense.
 
RESEARCH AND DEVELOPMENT
 
    Research and development expenditures are generally charged to operations as
incurred. Statement of Financial Accounting Standards No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased or Otherwise Marketed,"
requires the capitalization of certain software development costs subsequent to
the establishment of technological feasibility. Based on the Company's product
development process, technological feasibility is established upon the
completion of a working model. Costs incurred by the Company between the
completion of the working model and the point at which the product is ready for
general release have been insignificant. Accordingly, the Company has charged
all such costs to research and development expenses in the accompanying
statements of operations.
 
PRODUCT CONCENTRATION
 
    The Company derives a majority of its revenue from the licensing of products
in the TUXEDO product line, to which the Company has certain distribution rights
from Novell, Inc. and fees from related services. These products and services
are expected to continue to account for a majority of the Company's revenue for
the foreseeable future. Consequently, a reduction in demand or an increase in
competition for these products due to market factors, or a decline in sales of
such products, would affect operating results adversely.
 
2. EXTRAORDINARY ITEM
 
    On June 27, 1995, the Company entered into a settlement agreement to resolve
all disputes with respect to a loan agreement with one of its creditors. In
connection with this settlement agreement, the Company realized an extraordinary
gain of approximately $1,035,000, representing the forgiveness of both principal
and accrued interest due on the loan.
 
3. LEASE COMMITMENTS
 
    Facilities are leased under operating leases expiring at various dates
through November 30, 1999. Certain leases have escalating rental payments and
options for renewal for additional terms. Future minimum rental payments for the
years ended and period ended December 31, are as follows:
 
<TABLE>
<S>                                                                <C>
November 2 through December 31, 1995.............................  $  27,000
1996.............................................................    164,000
1997.............................................................    171,000
1998.............................................................    176,000
1999.............................................................    162,000
                                                                   ---------
Total............................................................  $ 700,000
                                                                   ---------
                                                                   ---------
</TABLE>
 
                                      F-37
<PAGE>
                        INDEPENDENCE TECHNOLOGIES, INC.
 
          NOTES TO STATEMENTS OF OPERATIONS AND CASH FLOWS (CONTINUED)
 
            FOR THE PERIOD FROM JANUARY 1, 1995 TO NOVEMBER 1, 1995
 
3. LEASE COMMITMENTS (CONTINUED)
    Rent expense was $147,916 for the period from January 1, 1995 to November 1,
1995.
 
4. INCOME TAXES
 
    Due to the Company's loss position, there is no provision for income taxes
for the period from January 1, 1995, to November 1, 1995.
 
    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets for federal and state income taxes are as
follows:
 
<TABLE>
<CAPTION>
                                                                                 NOVEMBER 1,
                                                                                     1995
                                                                                --------------
<S>                                                                             <C>
Deferred tax assets:
  Net operating loss carryforwards............................................  $      743,000
  Deferred revenue............................................................         554,000
  Accruals and reserves.......................................................         527,000
  Fixed assets................................................................          39,000
                                                                                --------------
    Total deferred tax assets.................................................       1,863,000
  Valuation allowance.........................................................      (1,863,000)
                                                                                --------------
Net deferred tax assets.......................................................  $            0
                                                                                --------------
                                                                                --------------
</TABLE>
 
    Based upon the weight of available evidence, which includes the Company's
historical operating performance, the reported cumulative net loss for the prior
three years, and the uncertainties regarding future results of operations of the
Company, the Company has provided a full valuation allowance against its net
deferred tax assets as at this time it is more likely than not that the deferred
tax assets will not be realized. The change in the valuation allowance was an
increase of $7,000 for the period ended November 1, 1995.
 
    As of November 1, 1995, the Company had net operating loss carryforwards for
federal and state tax purposes of approximately $2,100,000 and $200,000 which
will expire from 1998 through 2009. Utilization of net operating loss
carryforwards may be subject to a substantial annual limitation due to the
ownership change limitations provided by the Internal Revenue Code of 1986, as
amended, and similar state provisions. The annual limitation may result in the
expiration of net operating loss carryforwards before full utilization.
 
   
5. OTHER
    
 
   
    During the period from August 1995 through October 1995 approximately
$2,000,000 of convertible debentures and approximately $467,000 of accrued
royalties were converted into common stock of the Company.
    
 
                                      F-38
<PAGE>
              REPORT OF ERNST & YOUNG AUDIT, INDEPENDENT AUDITORS
 
The Board of Directors
 
USL Finance S.A.
 
    We have audited the accompanying consolidated balance sheet of USL Finance
S.A. as of May 5, 1996 and the related consolidated statements of operations,
shareholders' equity, and cash flows for the period from November 1, 1995
through May 5, 1996. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
 
   
    We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
    
 
   
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
USL Finance S.A. as of May 5, 1996, and the consolidated results of its
operations, and its cash flows for the period from November 1, 1995 to May 5,
1996, in conformity with United States generally accepted accounting principles.
    
 
                                          ERNST & YOUNG Audit
 
Paris, France
 
December 24, 1996
 
                                      F-39
<PAGE>
                                USL FINANCE S.A.
 
                           CONSOLIDATED BALANCE SHEET
 
                                  MAY 5, 1996
 
                         (IN THOUSANDS OF U.S. DOLLARS)
 
                                     ASSETS
 
<TABLE>
<S>                                                                                  <C>
Current assets:
  Cash and cash equivalents........................................................  $   2,259
  Accounts receivable..............................................................      2,875
  Prepaid expenses and other current assets........................................        284
                                                                                     ---------
      Total current assets.........................................................      5,418
                                                                                     ---------
  Leasehold improvements and equipment, net........................................        642
                                                                                     ---------
  Distribution rights, net of amortization.........................................        294
                                                                                     ---------
      Total assets.................................................................  $   6,354
                                                                                     ---------
                                                                                     ---------
 
                             LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable.................................................................  $     405
  Accrued expenses.................................................................        350
  Payable to BEA Systems Inc. .....................................................      3,091
  Value-added tax payable..........................................................        277
  Deferred revenues................................................................        411
                                                                                     ---------
      Total current liabilities....................................................      4,534
 
Net deferred tax liabilities.......................................................          5
Deferred revenues..................................................................        750
Long-term debt.....................................................................        541
Minority interests.................................................................         76
 
Commitments........................................................................
 
Shareholders' equity:
  Common stock, FF 100 par value; 13,220 shares issued and
    outstanding....................................................................        270
  Capital in excess of par value...................................................        131
  Cumulative translation adjustment................................................        (24)
  Retained Earnings................................................................         71
                                                                                     ---------
    Total shareholders' equity.....................................................        448
                                                                                     ---------
      Total liabilities and shareholders' equity...................................  $   6,354
                                                                                     ---------
                                                                                     ---------
</TABLE>
 
                            See accompanying notes.
 
                                      F-40
<PAGE>
                                USL FINANCE S.A.
 
                      CONSOLIDATED STATEMENT OF OPERATIONS
 
                      NOVEMBER 1, 1995 THROUGH MAY 5, 1996
 
                         (IN THOUSANDS OF U.S. DOLLARS)
 
<TABLE>
<S>                                                                          <C>
Revenues:
  License..................................................................     $   2,024
  Service..................................................................           868
                                                                                  -------
Total revenues.............................................................         2,892
 
Cost of revenues:
  License..................................................................         1,044
  Service..................................................................           873
                                                                                  -------
Total cost of revenues.....................................................         1,917
                                                                                  -------
Gross profit...............................................................           975
 
Operating expenses:
  Marketing and selling....................................................           667
  General and administrative...............................................            88
  Amoritzation of distribution rights......................................            76
                                                                                  -------
    Total operating expenses...............................................           831
                                                                                  -------
Income from operations.....................................................           144
 
Interest income............................................................            64
Interest expense...........................................................           (20)
Minority interest..........................................................           (32)
                                                                                  -------
 
Income before income taxes.................................................           156
Income taxes...............................................................           (85)
                                                                                  -------
Net income.................................................................     $      71
                                                                                  -------
                                                                                  -------
</TABLE>
 
                            See accompanying notes.
 
                                      F-41
<PAGE>
                                USL FINANCE S.A.
 
                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
 
                         (IN THOUSANDS OF U.S. DOLLARS)
 
<TABLE>
<CAPTION>
                                       COMMON STOCK                             CUMULATIVE                        TOTAL
                                  ----------------------   CAPITAL IN EXCESS    TRANSLATION     RETAINED      SHAREHOLDERS'
                                   SHARES      AMOUNT        OF PAR VALUE       ADJUSTMENT      EARNINGS         EQUITY
                                  ---------  -----------  -------------------  -------------  -------------  ---------------
<S>                               <C>        <C>          <C>                  <C>            <C>            <C>
Balance October 31, 1995........     13,220   $     270        $     131         $     (21)     $  --           $     380
  Translation adjustment........     --          --               --                    (3)        --                  (3)
  Net income....................     --          --               --                --                 71              71
                                  ---------       -----            -----               ---            ---           -----
Balance May 5, 1996.............     13,220   $     270        $     131         $     (24)     $      71       $     448
                                  ---------       -----            -----               ---            ---           -----
                                  ---------       -----            -----               ---            ---           -----
</TABLE>
 
                                      F-42
<PAGE>
                                USL FINANCE S.A.
 
                      CONSOLIDATED STATEMENT OF CASH FLOWS
 
              FOR THE PERIOD FROM NOVEMBER 1, 1995 TO MAY 5, 1996
 
                         (IN THOUSANDS OF U.S. DOLLARS)
 
<TABLE>
<S>                                                                         <C>
OPERATING ACTIVITIES
Net income................................................................      $      71
Adjustments to reconcile net income to net cash provided by operating
  activities:
    Depreciation and amortization of leasehold improvements and
      equipment...........................................................             48
    Amortization of distribution rights...................................             76
    Interests in equity investments.......................................             20
    Deferred income taxes.................................................             18
    Increase (decrease) in cash from:
    Accounts receivable...................................................            475
    Prepaid expenses and other current assets.............................           (174)
    Accounts payable and accrued expenses.................................            522
    Deferred revenues.....................................................          1,199
    Value-added tax payable...............................................            128
                                                                                  -------
      Net cash provided by operating activities...........................          2,383
 
INVESTING ACTIVITIES
Purchase of leasehold improvements and equipment..........................           (479)
Proceeds from sale of equipment...........................................              6
Business acquisition, net of cash acquired................................           (541)
                                                                                  -------
Net cash used in investing activities.....................................         (1,014)
FINANCING ACTIVITIES
Increase in long-term debt................................................            559
                                                                                  -------
Net cash provided by financing activities.................................            559
Effect of changes in foreign exchange rates on cash.......................            (81)
                                                                                  -------
Net increase in cash and cash equivalents.................................          1,847
Cash and cash equivalents at beginning of period..........................            412
                                                                                  -------
Cash and cash equivalents at end of period................................      $   2,259
                                                                                  -------
                                                                                  -------
</TABLE>
 
                                      F-43
<PAGE>
                                USL FINANCE S.A.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                PERIOD FROM NOVEMBER 1, 1995 THROUGH MAY 5, 1996
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  ORGANIZATION
 
    USL Finance S.A. (the "Company") was incorporated in Paris, France in August
1995 and had no operating activity until it acquired from Novell, Inc., with
effect from November 3, 1995, a 90% equity ownership in USL France S.A. (USL).
The main activities of USL are the marketing and support of UNIX software
products as well as offering related consulting and training services. USL's
primary software product is TUXEDO, a product developed by Novell, Inc. USL's
products are distributed through its direct sales force as well as through an
external marketing firm.
 
    With effect from February 23, 1996, Novell, Inc. granted to BEA Systems,
Inc. (BEA) certain rights and licenses relating to TUXEDO software and USL
entered into a new royalty agreement with BEA. Novell, Inc. transferred to BEA
its debt due by USL and related to the royalty agreement in effect between
Novell, Inc. and USL before February 23, 1996. On May 5, 1996, BEA purchased
100% of the shares of USL. The accompanying financial statements have been
prepared on the Company's historical cost basis, and do not reflect any
adjustments resulting from the acquisition.
 
  BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
 
    The Company and its subsidiary prepare their financial statements in
accordance with accounting principles generally accepted in France.
 
    The consolidated financial statements have been restated in order to comply
with accounting principles generally accepted in the United States and stated in
U.S. dollars. The preparation of financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying footnotes. Actual results could differ from those
estimates.
 
    The consolidated financial statements include the accounts of the Company
and its subsidiary. All significant intercompany balances and transactions have
been eliminated.
 
  REVENUE RECOGNITION
 
    The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants' Statement of Position 91-1 on software revenue
recognition. License fees under software license agreements with end users and
distributors are recognized upon shipment if no significant vendor obligations
remain and collection of the resulting receivables is deemed probable. Service
revenues are derived from consulting and training services and fees earned under
annual or multi-year maintenance agreements for providing updates (on an "if and
when available" basis) for existing software products, user documentation, and
technical support. Maintenance revenue is recognized ratably over the term of
such agreements. If such services are included in the initial licensing fee, the
value of the services is unbundled and recognized ratably over the related
service period. Revenue from consulting and training services is recognized as
the services are performed.
 
  CONCENTRATION OF CREDIT RISK
 
    The Company sells its products to customers in a variety of industries in
Southern Europe, Africa, and Israel. The Company performs ongoing credit
evaluations of its customers and maintains
 
                                      F-44
<PAGE>
                                USL FINANCE S.A.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                PERIOD FROM NOVEMBER 1, 1995 THROUGH MAY 5, 1996
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
allowances for potential credit losses. To date, such losses have been within
management's expectations.
 
    Three customers accounted for 12%, 11%, and 10% of revenues, respectively.
 
  CASH AND CASH EQUIVALENTS
 
    Cash and cash equivalents consist of cash on deposit or temporary cash
investments with original maturities of 90 days or less. The Company considers
all highly liquid investments with insignificant interest rate risk and
purchased with an original maturity of three months or less to be cash
equivalents.
 
  FAIR VALUE OF FINANCIAL INSTRUMENTS
 
    At May 5, 1996, the carrying values of cash and cash equivalents
approximated their market value based on the short-term maturities of these
instruments. The fair value of long-term debt is estimated using current
interest rates available to the Company for debt instruments with similar terms,
degree of risk, and maturities. The carrying value of the loans approximate
their respective fair value.
 
  FOREIGN CURRENCY TRANSLATIONS
 
    The functional currency of the Company is the French Franc ("FF"). Foreign
currency transactions outstanding at the balance sheet date are translated into
French Francs at year-end rates of exchange. Aggregate realized and unrealized
gains or losses from foreign currency transactions are included in results of
operations and amounted to a gain of $10,739. The effect of translating to U.S.
Dollars is recorded as a cumulative translation adjustment.
 
  DISTRIBUTION RIGHTS
 
    Distribution rights relate to the right to distribute products in certain
territories. Amortization is computed using the straight-line method over 30
months.
 
  LEASEHOLD IMPROVEMENTS AND EQUIPMENT
 
    Leasehold improvements and equipment are stated at cost. Depreciation and
amortization are computed using the straight-line method over the following
estimated useful lives:
 
<TABLE>
<S>                                    <C>
Purchase software                      3 years
Computer equipment                     5 years
Furniture and other equipment          10 years
Leasehold improvements                 10 years, or lease term if less
</TABLE>
 
  INCOME TAXES
 
    In accordance with Statement of Financial Accounting Standards No. 109, the
liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are
 
                                      F-45
<PAGE>
                                USL FINANCE S.A.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                PERIOD FROM NOVEMBER 1, 1995 THROUGH MAY 5, 1996
 
1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
expected to reverse. A valuation allowance is established if, based on the
weight of available evidence, it is more likely than not that some portion or
all of the deferred tax asset will not be realized.
 
2.  BUSINESS ACQUISITION AND DEBT
 
   
    On November 3, 1995, the Company completed a transaction with Novell, Inc.
in which the Company purchased from Novell, Inc. a 90% interest in USL for a
consideration of FF4,500,000 (approximately $870,000), of which FF3,000,000 was
paid in cash with the balance payable in installments with interest at 5% as
follows:
    
 
    - FF500,000 due on October 31, 1998 (approximately $97,000)
 
    - FF500,000 due on October 31, 1999 (approximately $97,000)
 
    - FF500,000 due on October 31, 2000 (approximately $97,000)
 
    The acquisition was accounted for using the purchase method of accounting in
accordance with APB Opinion No. 16, "Business Combinations" ("APB16"). Under
APB16, purchase price allocations were made to the assets acquired and the
liabilities assumed based on their respective fair value, as follows:
 
<TABLE>
<S>                                                                <C>
Purchase price...................................................  $ 870,406
Estimated fair value of net tangibles assets acquired............    502,321
                                                                   ---------
Excess of purchase price over net tangible assets acquired.......  $ 368,085
</TABLE>
 
    The excess of purchase price over net tangible assets acquired was allocated
to distribution rights.
 
    On January 1, 1995, the Company issued FF1,300,000 (approximately $250,000)
in bonds which are payable in full on November 20, 2000. Interest is payable
annually at a rate of 5% beginning October 31, 1996.
 
3.  CASH AND CASH EQUIVALENTS
 
    Cash and cash equivalents at May 5, 1996 include (in thousands):
 
<TABLE>
<S>                                                               <C>
Cash held at bank...............................................   $       7
Temporary cash investments......................................       2,252
                                                                  -----------
                                                                   $   2,259
                                                                  -----------
                                                                  -----------
</TABLE>
 
                                      F-46
<PAGE>
                                USL FINANCE S.A.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                PERIOD FROM NOVEMBER 1, 1995 THROUGH MAY 5, 1996
 
4.  LEASEHOLD IMPROVEMENT AND EQUIPMENT
 
    Leasehold improvement and equipment at May 5, 1996 include (in thousands):
 
<TABLE>
<S>                                                               <C>
Purchased software..............................................    $      94
Computer equipment..............................................          276
Furniture and other equipment...................................          126
Leasehold improvements..........................................          280
                                                                        -----
                                                                          776
Accumulated depreciation and amortization.......................         (134)
                                                                        -----
                                                                    $     642
                                                                        -----
                                                                        -----
</TABLE>
 
    Depreciation and amortization expense for the period from November 1, 1995
through May 5, 1996 was $47,904.
 
   
5.  PAYABLE TO BEA SYSTEMS, INC (BEA)
    
 
   
    The liability to BEA at May 5, 1996 of approximately $3,091,000 consists of
royalties due under the royalty agreement in effect between the parties and
royalties originally due to Novell, Inc which were acquired by BEA in February
1996. All amounts payable to BEA are due currently.
    
 
   
6.  SHAREHOLDERS' EQUITY
    
 
    At May 5, 1996, the issued and outstanding share capital of the Company
consisted of 13,220 shares with a nominal value of $19.
 
    Dividends may be distributed from the statutory retained earnings, subject
to the requirements of French law and the Company's by-laws. The Company has not
distributed any dividends since its inception and had no distributable retained
earnings at May 5, 1996.
 
   
7.  INCOME TAXES
    
 
    The provision for income taxes consists of the following (in thousands):
 
<TABLE>
<S>                                                                     <C>
Current...............................................................  $      67
Deferred..............................................................         18
                                                                              ---
Provision for income taxes............................................  $      85
                                                                              ---
                                                                              ---
</TABLE>
 
    A reconciliation of income taxes computed at the French statutory rate
(36.67%) to the income tax benefit is as follows (in thousands):
 
<TABLE>
<S>                                                                     <C>
Income taxes computed at the French statutory rate....................  $      57
Amortization of distribution rights not deductible for tax............         28
                                                                              ---
    Total.............................................................  $      85
                                                                              ---
                                                                              ---
</TABLE>
 
    Deferred taxes reflect the net tax effects of temporary differences between
the carrying amount of assets and liabilities for financial reporting purposes
and the amount used for income tax purposes.
 
                                      F-47
<PAGE>
                                USL FINANCE S.A.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                PERIOD FROM NOVEMBER 1, 1995 THROUGH MAY 5, 1996
 
   
7.  INCOME TAXES (CONTINUED)
    
Significant components of the Company's deferred taxes consist of the following
at May 5, 1996 (in thousands):
 
<TABLE>
<S>                                                                       <C>
Deferred tax assets:
  Net operating loss carryforwards......................................    $       8
  Deferred start-up costs...............................................           11
  Other.................................................................            1
                                                                                  ---
                                                                                   20
Deferred tax liabilities:
  Maintenance recognized as a purchase accounting adjustment............           25
                                                                                  ---
Net deferred tax liability..............................................    $      (5)
                                                                                  ---
                                                                                  ---
</TABLE>
 
   
8.  EMPLOYEE RETIREMENT PLANS
    
 
    The Company contributes to government pensions for personnel in France in
accordance with French law based on the salaries of the individuals. There
exists no actuarial liability in connection with these plans. French law also
requires payment of a lump sum retirement indemnity to employees based upon
years of service and compensation at retirement. Benefits do not vest prior to
retirement. The Company's obligation at May 5, 1996 was immaterial.
 
   
9.  OPERATING LEASE COMMITMENTS
    
 
    The Company leases its facilities and certain equipment under operating
leases that expire through 2002. Future minimum lease payments under operating
leases due for the periods from May 5, 1996 through January 31, 1997 and for
fiscal years ending January 31 are as follows (in thousands):
 
   
<TABLE>
<S>                                                                       <C>
May 5, 1996 through January 31, 1997....................................    $     156
12 month periods ending January 31, 1998................................          208
1999....................................................................          208
2000....................................................................          122
2001 and thereafter.....................................................            1
                                                                                -----
                                                                            $     695
                                                                                -----
                                                                                -----
</TABLE>
    
 
   
    Rental expense for the period from November 1, 1995 through May 5, 1996 was
approximately $108,000.
    
 
                                      F-48
<PAGE>
                                  UNDERWRITING
 
   
    Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the Underwriters named below, and each of
the Underwriters, for whom Goldman, Sachs & Co., Alex. Brown & Sons
Incorporated, Robertson, Stephens & Company LLC, and SoundView Financial Group,
Inc. are acting as representatives, has severally agreed to purchase from the
Company, the respective number of shares of Common Stock set forth opposite its
name below:
    
 
   
<TABLE>
<CAPTION>
                                                                                                 NUMBER OF SHARES
                                         UNDERWRITER                                             OF COMMON STOCK
- ----------------------------------------------------------------------------------------------  ------------------
<S>                                                                                             <C>
Goldman, Sachs & Co. .........................................................................
Alex. Brown & Sons Incorporated...............................................................
Robertson, Stephens & Company LLC.............................................................
SoundView Financial Group, Inc................................................................
 
                                                                                                ------------------
      Total...................................................................................         5,000,000
                                                                                                ------------------
                                                                                                ------------------
</TABLE>
    
 
   
    Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.
    
 
   
    The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $         per share. The Underwriters may allow, and
such dealers may reallow, a concession not in excess of $         per share to
certain brokers and dealers. After the shares of Common Stock are released for
sale to the public, the offering price and other selling terms may from time to
time be varied by the representatives.
    
 
   
    The Company has granted to the Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of 750,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 5,000,000 shares of Common
Stock offered hereby.
    
 
   
    The Company has agreed, with certain limited exceptions, that, during the
period beginning from the date of this Prospectus and continuing to and
including the date 180 days after the date of the Prospectus, not to offer,
sell, contract to sell, or otherwise dispose of any securities of the Company
that are substantially similar to the shares of Common Stock including but not
limited to any securities that are convertible into, or exchangeable for, or
that represent the right to receive Common Stock or any such substantially
similar securities without the prior written consent of the designated
representative of the Underwriters, except for the shares of Common Stock
offered in connection with the offering and except that the Company may issue
securities pursuant to employee stock plans and currently outstanding options.
    
 
   
    During and after the offering, the Underwriters may purchase and sell the
Common Stock in the open market. These transactions may include overallotment
and stabilizing transactions, "passive"
    
 
                                      U-1
<PAGE>
   
market making (see below) and purchases to cover syndicate short positions
created in connection with the offering. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Common Stock sold in the offering for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the Common Stock
which may be higher than the price that might otherwise prevail in the open
market. These transactions may be effected on the Nasdaq National Market, and
these activities, if commenced, may be discontinued at any time.
    
 
   
    The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Common Stock offered by them.
    
 
   
    Prior to this offering, there has been no public market for the shares. The
initial public offering price will be negotiated among the Company and the
representatives. Among the factors to be considered in determining the initial
public offering price of the Common Stock, in addition to prevailing market
conditions, will be the Company's historical performance, estimates of the
business potential and earnings prospects of the Company, an assessment of the
Company's management and the consideration of the above factors in relation to
market valuations of companies in related businesses.
    
 
   
    In connection with this offering, the Underwriters have reserved
approximately 535,714 shares of Common Stock for sale at the initial public
offering price to persons associated with the Company, including $2,000,000
worth of Common Stock (or approximately 285,714 shares based on an estimated
initial public offering price of $7.00 per share) that has been reserved for
sale to Digital in connection with the acquisition by the Company of exclusive
rights to certain software products from Digital.
    
 
   
    The number of shares available for sale to the general public will be
reduced to the extent any reserved shares are purchased. Any reserved shares not
so purchased will be offered by the Underwriters on the same basis as the other
shares offered hereby.
    
 
   
    The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
    
 
                                      U-2
<PAGE>
   
BEA--DESCRIPTION OF GRAPHICS
    
 
   
    Set forth on the inside back cover are three concentric circles. The inner
circle contains the words "BEA TUXEDO." The middle circle is divided into four
equal quadrants. The upper right hand quadrant contains the caption "Objects -
BEA OBJECTBROKER"; the lower right hand quadrant contains the caption "BEA JOLT
Internet"; the upper left hand quadrant contains the caption "Legacy - BEA TP
BLUE BEA CONNECT"; the lower left hand quadrant contains the caption "BEA
MESSAGEQ - Messaging". The outer circle contains three captions: in the upper
left hand corner is set forth the caption "Development - BEA BUILDER", in the
upper right hand corner is set forth the caption "Management - BEA MANAGER", at
the bottom is set forth the caption "CONSULTING - TRAINING - SUPPORT Services".
Above the graphics is set forth the caption "THE BEA ENTERPRISE TRANSACTION
FRAMEWORK". Underneath the graphics is set forth the following text:
    
 
   
    "The BEA Enterprise Transaction Framework is an integrated middleware
software platform, based upon BEA TUXEDO, for developing, deploying, and
managing distributed mission-critical applications.
    
 
   
    BEA TUXEDO provides distributed transaction processing and application
messaging capabilities, as well as the full complement of services necessary to
build and run these applications.
    
 
   
    BEA Jolt extends the capabilities of BEA TUXEDO to the Internet and
intranets without the need for additional application programming.
    
 
   
    BEA TP Blue provides mainframe-to-UNIX and mainframe-to-NT applications
portability, compatibility, and connectivity for CICS-based transaction
processing.
    
 
   
    BEA Connect allows applications to access remote applications services on
mainframes or other hosts.
    
 
   
    BEA Builder enables programmers to use common development environments to
develop BEA TUXEDO-based applications.
    
 
   
    BEA Manager extends the native BEA TUXEDO management capabilities by
allowing it to integrate with third-party management frameworks.
    
 
   
    BEA ObjectBroker is an environment for managing and communicating among
object-oriented application components. The Company has entered into an
agreement, subject to closing thereof, to acquire exclusive rights to
ObjectBroker from Digital Equipment Corporation.
    
 
   
    BEA MessageQ provides interoperability among heterogeneous applications. The
Company has entered into an agreement, subject to closing thereof, to acquire
exclusive rights to BEA MessageQ from Digital Equipment Corporation.
    
 
   
    BEA's services provide customers with training, consulting, and technical
support for their mission-critical applications."
    
<PAGE>
   
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
    
<PAGE>
- ----------------------------------------------
                                  ----------------------------------------------
- ----------------------------------------------
                                  ----------------------------------------------
 
    NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
 
                               ------------------
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                             PAGE
                                             -----
<S>                                       <C>
Prospectus Summary......................           3
Risk Factors............................           6
Use of Proceeds.........................          17
Dividend Policy.........................          17
Capitalization..........................          18
Dilution................................          19
Selected Consolidated Financial Data....          20
Management's Discussion and
  Analysis of Financial Condition
  and Results of Operations.............          21
Business................................          33
Management..............................          54
Principal Stockholders..................          61
Certain Transactions....................          63
Description of Capital Stock............          65
Shares Eligible for Future Sale.........          68
Legal Matters...........................          68
Experts.................................          69
Additional Information..................          69
Index to Consolidated Financial
  Statements............................         F-1
Underwriting............................         U-1
</TABLE>
    
 
   
    THROUGH AND INCLUDING       , 1997 (25 DAYS AFTER THE DATE OF THIS
PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR
NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
    
 
   
                                5,000,000 SHARES
    
 
                               BEA SYSTEMS, INC.
 
                                  COMMON STOCK
                          (PAR VALUE $0.001 PER SHARE)
 
                              --------------------
 
                                     [LOGO]
 
                              --------------------
 
                              GOLDMAN, SACHS & CO.
 
                        ALEX. BROWN & SONS INCORPORATED
 
                         ROBERTSON, STEPHENS & COMPANY
 
                        SOUNDVIEW FINANCIAL GROUP, INC.
 
                      REPRESENTATIVES OF THE UNDERWRITERS
 
- ----------------------------------------------
                                  ----------------------------------------------
- ----------------------------------------------
                                  ----------------------------------------------
<PAGE>
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
    Under Section 145 of the General Corporate Law of the State of Delaware, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). The Registrant's
Amended and Restated Bylaws (Exhibit 3.3 hereto) also provide for mandatory
indemnification of its directors and executive officers, and permissive
indemnification of its employees and agents, to the fullest extent permissible
under Delaware law.
 
    The Registrant's Amended and Restated Certificate of Incorporation (Exhibit
3.2 hereto) provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its Stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
 
    Prior to the effective date of the Registration Statement, the Registrant
will have entered into agreements with its directors and certain of its
executive officers that require the Registrant to indemnify such persons against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Registrant and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The indemnification agreements also set forth certain procedures
that will apply in the event of a claim for indemnification thereunder.
 
    The Registrant intends to obtain in conjunction with the effectiveness of
the Registration Statement a policy of directors' and officers' liability
insurance that insures the Company's directors and officers against the cost of
defense, settlement or payment of a judgment under certain circumstances.
 
   
    The Underwriting Agreement filed as Exhibit 1.1 to this Registration
statement provides for indemnification by the Underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act or otherwise.
    
 
                                      II-1
<PAGE>
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
 
    The expenses to be paid by the Registrant in connection with the
distribution of the securities being registered, other than underwriting
discounts and commissions, are as follows:
 
   
<TABLE>
<CAPTION>
                                                                                    AMOUNT*
                                                                                 -------------
<S>                                                                              <C>
Securities and Exchange Commission Filing Fee..................................  $      13,069
NASD Filing Fee................................................................          4,813
Nasdaq National Market Listing Fee.............................................         30,000
Accounting Fees and Expenses...................................................      1,300,000
Blue Sky Fees and Expenses.....................................................         25,000
Legal Fees and Expenses........................................................        300,000
Transfer Agent and Registrar Fees and Expenses.................................         15,000
Printing Expenses..............................................................        375,000
Miscellaneous Expenses.........................................................         37,118
                                                                                 -------------
    Total......................................................................  $   2,100,000
                                                                                 -------------
                                                                                 -------------
</TABLE>
    
 
- --------------
 
*  All amounts are estimates except the SEC filing fee, the NASD filing fee and
the Nasdaq National Market listing fee.
 
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
 
   
    Since the Registrant's inception in January 1995 through February 28, 1997,
the Registrant has issued and sold the following unregistered securities:
    
 
   
    1.  During the period, the Registrant granted stock options to employees,
directors and consultants under its stock incentive plan covering an aggregate
of 7,975,575 shares of the Registrant's Common Stock, at exercise prices ranging
from $0.0100 to $6.00, with a weighted average exercise price of $1.04 per
share.
    
 
   
    2.  During the period, the Registrant issued and sold an aggregate of
618,492 shares of its Common Stock to 22 employees for cash and promissory notes
in the aggregate amount of $128,820.30 upon exercise of stock options granted
pursuant to the Registrant's stock incentive plan, at exercise prices ranging
from $0.01 to $0.285, with a weighted average exercise price of $0.241 per
share.
    
 
   
    3.  During the period, the Registrant issued and sold an aggregate of
10,365,608 shares of its Common Stock to Warburg, Pincus Ventures, L.P. and
certain employees, directors and consultants for an aggregate purchase price of
$2,094,039.98. Of such shares of Common Stock, on February 1, 1995 and September
28, 1995, 2,506,828 shares of Common Stock were sold to William T. Coleman III
for $378,466 payable $281,000 in cash and $97,446 by an installment note;
1,671,586 shares of Common Stock were sold to Edward W. Scott, Jr. for $252,402
payable $4,000 in cash and $248,402 by an installment note; and 1,671,586 shares
of Common Stock were sold to Alfred S. Chuang for $252,402 payable $54,000 in
cash and $198,402 by an installment note.
    
 
   
    4.  During the period, the Registrant issued and sold an aggregate of
17,066,000 shares of its Series A Preferred Stock (convertible into 34,132,000
shares of Common Stock) to Warburg, Pincus Ventures, L.P. and certain directors
for an aggregate purchase price of $29,182,200.
    
 
   
    5.  During the period, the Registrant issued and sold an aggregate of
19,847,800 shares of its Series B Preferred Stock (convertible into 3,192,864
and 3,209,236 shares of Common Stock at January 31, 1997 and February 28, 1997,
respectively, at an assumed initial public offering price of $7.00) to Warburg,
Pincus Ventures, L.P. for an aggregate purchase price of $16,347,800.
    
 
   
    The sale and issuance of securities in the transactions described in
paragraphs 1, 2, 3, 4 and 5 above were deemed to be exempt from registration
under the Securities Act by virtue of Rule 701
    
 
                                      II-2
<PAGE>
   
promulgated thereunder in that they were offered and sold either pursuant to
written compensatory benefit plans or pursuant to a written contract relating to
compensation, as provided by Rule 701 or were deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) thereof.
    
 
    Appropriate legends were affixed to the stock certificates issued in the
above transactions. Similar legends were imposed in connection with any
subsequent sales of any such securities. No Underwriters were employed in any of
the above transactions.
 
ITEM 27. EXHIBITS
 
    The exhibits are as set forth in the Exhibit Index.
 
ITEM 28. UNDERTAKINGS
 
   
    The Registrant hereby undertakes to provide the Underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit prompt
delivery to each purchaser.
    
 
    Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the issuer pursuant to the foregoing provisions, or
otherwise, the issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
 
    In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the issuer in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
 
    The Registrant hereby undertakes that:
 
    (1) For determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
issuer pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this Registration Statement as of the time the
Commission declared it effective.
 
    (2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial BONA FIDE
offering of those securities.
 
                                      II-3
<PAGE>
                                   SIGNATURES
 
   
    In accordance with the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
Amendment No.1 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Sunnyvale, State of
California on March 20, 1997.
    
 
<TABLE>
<S>                             <C>  <C>
                                BEA SYSTEMS, INC.
 
                                By:         /s/ WILLIAM T. COLEMAN III*
                                     -----------------------------------------
                                               William T. Coleman III
                                       PRESIDENT, CHIEF EXECUTIVE OFFICER AND
                                                      DIRECTOR
</TABLE>
 
   
    In accordance with the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
    
 
   
<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                    DATE
- ------------------------------  ----------------------------  -----------------
 
<C>                             <S>                           <C>
                                President, Chief Executive
 /s/ WILLIAM T. COLEMAN III*      Officer, Chairman of the
- ------------------------------    Board and Director           March 20, 1997
    William T. Coleman III        (Principal Executive
                                  Officer)
 
                                Executive Vice President,
      /s/ STEVE L. BROWN          Chief Financial Officer
- ------------------------------    and Secretary (Principal     March 20, 1997
        Steve L. Brown            Financial and Accounting
                                  Officer)
 
  /s/ EDWARD W. SCOTT, JR.*
- ------------------------------  Director                       March 20, 1997
     Edward W. Scott, Jr.
 
   /s/ STEWART K.P. GROSS*
- ------------------------------  Director                       March 20, 1997
      Stewart K.P. Gross
 
   /s/ WILLIAM H. JANEWAY*
- ------------------------------  Director                       March 20, 1997
      William H. Janeway
 
      /s/ CARY J. DAVIS*
- ------------------------------  Director                       March 20, 1997
        Cary J. Davis
</TABLE>
    
 
                                      II-4
<PAGE>
   
<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                    DATE
- ------------------------------  ----------------------------  -----------------
 
<C>                             <S>                           <C>
       /s/ CAROL BARTZ*
- ------------------------------  Director                       March 20, 1997
         Carol Bartz
 
       /s/ DEAN MORTON*
- ------------------------------  Director                       March 20, 1997
         Dean Morton
 
   * By: /s/ STEVE L. BROWN
- ------------------------------
        Steve L. Brown
       ATTORNEY-IN-FACT
</TABLE>
    
 
                                      II-5
<PAGE>
               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
   
    We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
March 10, 1997, except for Note 14, as to which the date is March 19, 1997, in
Amendment No. 1 to the Registration Statement (Form SB-2 No. 333-20791) and
related Prospectus of BEA Systems, Inc. for the registration of 5,750,000 shares
of its common stock.
    
 
   
                                                           /s/ ERNST & YOUNG LLP
    
 
   
San Jose, California
March 19, 1997
    
 
                                      II-6
<PAGE>
               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
   
    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 10, 1997, with respect to the financial
statements of Information Management Company included in Amendment No. 1 to the
Registration Statement (Form SB-2 No. 333-20791) and related Prospectus of BEA
Systems, Inc. for the registration of 5,750,000 shares of its common stock.
    
 
   
                                                           /s/ ERNST & YOUNG LLP
    
 
   
Metro Park, New Jersey
March 19, 1997
    
 
                                      II-7
<PAGE>
               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
 
   
    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 20, 1997, with respect to the statements of
operations and cash flows of Independence Technologies, Inc. included in
Amendment No. 1 to the Registration Statement (Form SB-2 No. 333-20791) and
related Prospectus of BEA Systems, Inc. for the registration of 5,750,000 shares
of its common stock.
    
 
   
                                                           /s/ ERNST & YOUNG LLP
    
 
   
San Jose, California
March 19, 1997
    
 
                                      II-8
<PAGE>
   
              CONSENT OF ERNST & YOUNG AUDIT, INDEPENDENT AUDITORS
    
 
   
    We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated December 24, 1996 with respect to the financial
statements of USL Finance S.A. included in Amendment No. 1 to the Registration
Statement (Form SB-2 No. 333-20791) and related Prospectus of BEA Systems, Inc.
for the registration of 5,750,000 shares of its common stock.
    
 
   
                                                         /s/ ERNST & YOUNG Audit
    
 
   
Paris, France
March 19, 1997
    
 
                                      II-9
<PAGE>
                                 EXHIBIT INDEX
 
   
<TABLE>
<CAPTION>
  EXHIBIT
  NUMBER                                                     DOCUMENT
- -----------  --------------------------------------------------------------------------------------------------------
<C>          <S>
      1.1    Form of Underwriting Agreement..........................................................................
   3.1 DEG.  Restated Certificate of Incorporation of the Registrant, as currently in effect.........................
      3.2    Form of Registrant's Restated Certificate of Incorporation to be adopted prior to completion of the
               offering..............................................................................................
   3.3 DEG.  Registrant's Bylaws, as currently in effect along with Certificate of Amendment of Bylaws, dated
               November 1995.........................................................................................
      3.4    Form of Registrant's Amended and Restated Bylaws, to be adopted upon completion of the offering.........
      3.5    Form of Registrant's Amended and Restated Certificate of Incorporation to be adopted upon completion of
               the offering..........................................................................................
      4.1    Reference is made to Exhibits 3.1 and 3.2, 3.3 and 3.4..................................................
      5.1    Opinion of Morrison & Foerster LLP as to the legality of the Common Stock...............................
  10.1 DEG.  Investor Rights Agreement by and among the Registrant and William T. Coleman III, Alfred S. Chuang,
               Edward W. Scott, Jr. and Warburg, Pincus Ventures, L.P., dated September 28, 1995.....................
  10.2 DEG.  Form of Indemnification Agreement between the Registrant and each of its executive officers and
               directors.............................................................................................
  10.3 DEG.  Employment Agreement between the Registrant and William T. Coleman III dated as of September 28, 1995...
  10.4 DEG.  Employment Agreement between the Registrant and Edward W. Scott, Jr. dated as of September 28, 1995.....
  10.5 DEG.  Employment Agreement between the Registrant and Alfred S. Chuang dated as of September 28, 1995.........
  10.6 DEG.  Form of Promissory Notes entered into between the Registrant, William T. Coleman III, Edward W. Scott,
               Jr. and Alfred S. Chuang each dated September 28, 1995................................................
  10.7 DEG.  Promissory Note secured by deed of trust entered into between the Registrant and Edward W. Scott, Jr.
               and Cheryl S. Scott, dated December 12, 1995..........................................................
     10.8+   Agreement between the Registrant and Novell, dated January 24, 1996, and Amendments thereto.............
  10.9 DEG.  Lease Agreement between the Registrant and William H. and Leila A. Cilker dated November 15, 1995 and
               First Amendment thereto...............................................................................
     10.10   Stock Purchase Agreement between the Registrant and Warburg, Pincus Ventures, L.P. dated September 28,
               1995, and Amendments thereto..........................................................................
 10.11 DEG.  Registrant's 1995 Flexible Stock Incentive Plan, including forms of agreements thereunder...............
     10.12   Registrant's 1997 Stock Incentive Plan, including forms of agreements thereunder.
     10.13   Registrant's 1997 Employee Stock Purchase Plan, including forms of agreements thereunder................
 10.14 DEG.  Subordinated Bridge Line of Credit between the Registrant and Warburg, Pincus Ventures, L.P., dated
               January 22, 1997......................................................................................
     10.15+  License Agreement between the Registrant and Digital Equipment Corporation, dated January 31, 1997 and
               First Amendment thereto...............................................................................
     10.16   1997 Management Bonus Plan..............................................................................
     11.1    Statement regarding calculation of net income (loss) per share..........................................
  21.1 DEG.  List of Significant Subsidiaries........................................................................
     23.1    Consent of Morrison & Foerster LLP. Reference is made to Exhibit 5.1....................................
  23.2 DEG.  Consent of Ernst & Young LLP, Independent Auditors. Reference is made to Page II-6......................
  23.3 DEG.  Consent of Ernst & Young LLP, Independent Auditors. Reference is made to Page II-7......................
  23.4 DEG.  Consent of Ernst & Young LLP, Independent Auditors. Reference is made to Page II-8......................
  23.5 DEG.  Consent of Ernst & Young Audit, Indepentent Auditors. Reference is made to Page II-9....................
  24.1 DEG.  Powers of Attorney. Reference is made to pages II-4 and II-5............................................
  27.1 DEG.  Financial Data Schedule.................................................................................
</TABLE>
    
 
- --------------
 
   
+   Confidential treatment requested as to portions of this exhibit.
    
 
   
 DEG.   Previously filed.
    

<PAGE>

                                                                         DRAFT


                                BEA SYSTEMS, INC.

                                  COMMON STOCK,
                           $0.001 PAR VALUE PER SHARE
                                                             
                             ----------------------

                             UNDERWRITING AGREEMENT
                                                             
                             ----------------------

                                                          ______________, 1997


Goldman, Sachs & Co.,
Alex. Brown & Sons Incorporated,
Robertson, Stephens & Company,
SoundView Financial Group, Inc.
  As representatives of the several Underwriters
    named in Schedule 1 hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004

Ladies and Gentlemen:

     BEA Systems, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") an aggregate of
5,000,000 shares (the "Firm Shares") and, at the election of the Underwriters, 
up to 750,000 additional shares (the "Optional Shares") of Common Stock, $0.001
par value per share  ("Stock"), of the Company (the Firm Shares and the Optional
Shares that the Underwriters elect to purchase pursuant to Section 2 hereof
being collectively called the "Shares").

     1.   The Company represents and warrants to, and agrees with, each of the
Underwriters that:

          (a)  A registration statement on Form SB-2 (File No. 333-20791) (the
"Initial Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); such registration
statement and any post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto, to you for each of the other
Underwriters, have been declared effective by the Commission in such form; other
than a registration statement, if any, increasing the size of the Offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under the
Securities Act of 1933, as amended (the "Act"), which became effective upon
filing, no other document with respect to the 


                                      -1-
<PAGE>

Initial Registration Statement has heretofore been filed with the Commission; 
and no stop order suspending the effectiveness of the Initial Registration 
Statement, any post-effective amendment thereto or the Rule 462(b) 
Registration Statement, if any, has been issued and no proceeding for that 
purpose has been initiated or threatened by the Commission (any preliminary 
prospectus included in the Initial Registration Statement or filed with the 
Commission pursuant to Rule 424(a) of the rules and regulations of the 
Commission under the Act, is hereinafter called a "Preliminary Prospectus"; 
the various parts of the Initial Registration Statement and the Rule 462(b) 
Registration Statement, if any, including all exhibits thereto and including 
the information contained in the form of final prospectus filed with the 
Commission pursuant to Rule 424(b) under the Act in accordance with Section 
5(a) hereof and deemed by virtue of Rule 430A under the Act to be part of the 
Initial Registration Statement at the time it was declared effective each as 
amended at the time such part of the registration statement became effective 
or such part of the Rule 462(b) Registration Statement, if any, became or 
hereafter becomes effective, are hereinafter collectively called the 
"Registration Statement"; and such final prospectus, in the form first filed 
pursuant to Rule 424(b) under the Act, is hereinafter called the 
"Prospectus");

          (b)  No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus,
at the time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter through Goldman, Sachs & Co. expressly for use therein;

          (c)  The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration Statement and
any amendment thereto and as of the applicable filing date as to the Prospectus
and any amendment or supplement thereto, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; PROVIDED, HOWEVER, that
this representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in writing to
the Company by an Underwriter through Goldman, Sachs & Co. expressly for use
therein;

          (d)  Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus; and, since the respective
dates as of which information is given in the Registration Statement and the
Prospectus, there has not been any change in the capital stock (except for stock
options issued in the ordinary course of business, or stock issued upon exercise
of stock options, since the date of the Prospectus pursuant to stock option or
incentive plans described in the Prospectus) or long-term debt of the Company or
any of its subsidiaries or any material adverse change, or any development
involving a prospective 


                                      -2-
<PAGE>

material adverse change, in or affecting the general affairs, management, 
financial position, stockholders' equity or results of operations of the 
Company and its subsidiaries, otherwise than as set forth or contemplated in 
the Prospectus;

          (e)  The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with the use
made and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries;

          (f)  The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases properties
or conducts any business so as to require such qualification, or is subject to
no material liability or disability by reason of the failure to be so qualified
in any such jurisdiction; and each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation;

          (g)  The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and conform to the description of the Stock contained in the Prospectus; and all
of the issued shares of capital stock of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and non-assessable
and (except for directors' qualifying shares) are owned directly or indirectly
by the Company, free and clear of all liens, encumbrances, equities or claims;

          (h)  The unissued Shares to be issued and sold by the Company to the
Underwriters hereunder have been duly and validly authorized and, when issued
and delivered against payment therefor as provided herein, will be duly and
validly issued and fully paid and non-assessable and will conform to the
description of the Stock contained in the Prospectus;

          (i)  The issue and sale of the Shares by the Company hereunder and the
compliance by the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the Company
or any of its subsidiaries is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or By-laws of
the Company or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties; and no consent, 


                                      -3-
<PAGE>

approval, authorization, order, registration or qualification of or with any 
such court or governmental agency or body is required for the issue and sale 
of the Shares or the consummation by the Company of the transactions 
contemplated by this Agreement, except the registration under the Act of the 
Shares and such consents, approvals, authorizations, registrations or 
qualifications as may be required under state securities or Blue Sky laws in 
connection with the purchase and distribution of the Shares by the 
Underwriters;

          (j)  Neither the Company nor any of its subsidiaries is in violation
of its Certificate of Incorporation or By-laws or in default in the performance
or observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease or
other material agreement or instrument to which it is a party or by which it or
any of its properties may be bound;

          (k)  The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock, and under the caption "Underwriting", insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;

          (l)  Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries; and, to the best of the Company's knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by
others;

          (m)  The Company is not and, after giving effect to the offering and
sale of the Shares, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");

          (n)  Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, and Ernst & Young Audit, who
have certified certain financial statements of USL Finance S.A., are each
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder;

          (o)  Neither the Company nor any of its subsidiaries has taken,
directly or indirectly, any action which was designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares;

          (p)  Except as disclosed in the Prospectus, the Company is not subject
to any agreements or arrangements which restrict the Company's ability to engage
in business with or to compete with any entity or any type of business;


                                      -4-
<PAGE>

          (q)  The Company has complied with all agreements or arrangements
which grant preemptive or registration rights to holders of the Company's
securities;

          (r)  Except as disclosed in the Prospectus, each of the Company and
its subsidiaries owns or possesses adequate licenses or other rights to use all
patents, patent licenses, trademarks, trade names, service marks, service names,
copyrights and other intellectual property rights ("lntellectual Property")
necessary to carry on its business as presently conducted; and neither the
Company nor any of its subsidiaries has received any notice of infringement or
conflict with asserted rights of others with respect to the Intellectual
Property which, singly or in the aggregate, if the subject of any unfavorable
decision, ruling or finding, would result in a material adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole;

          (s)  The Stock, including the Shares, is listed for quotation on the
Nasdaq National Market ("Nasdaq");

          (t)  The Company and its subsidiaries have obtained any permits,
consents and authorizations required to be obtained by them under applicable
federal, state, local and foreign laws or regulations in order to conduct their
business as described in the Prospectus, including, but not limited to, those
under laws or regulations relating to the protection of the environment or
concerning the handling, storage, disposal or discharge of toxic materials
(collectively, "Environmental Laws"), and any such permits, consents and
authorizations remain in full force and effect.  The Company and its
subsidiaries are in compliance with the Environmental Laws in all material
respects, and there is no pending or, to the Company's knowledge, threatened,
action or proceeding against the Company or any of its subsidiaries alleging
violations of the Environmental Laws; and

          (u)  The Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(a) transactions are executed in accordance with management's general or
specific authorizations; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (c) access to assets
is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

     2.   Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company, at
a purchase price per share of $........................, the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I hereto and
(b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided below, the Company agrees to
issue and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at the purchase price
per share set forth in clause (a) of this Section 2, that portion of the number
of Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares which 


                                      -5-
<PAGE>

such Underwriter is entitled to purchase as set forth opposite the name of 
such Underwriter in Schedule I hereto and the denominator of which is the 
maximum number of Optional Shares that all of the Underwriters are entitled 
to purchase hereunder.

          The Company hereby grants to the Underwriters the right to purchase at
their election up to 750,000 Optional Shares, at the purchase price per
share set forth in the paragraph above, for the sole purpose of covering
overallotments in the sale of the Firm Shares.  Any such election to purchase
Optional Shares may be exercised only by written notice from you to the Company,
given within a period of 30 calendar days after the date of this Agreement,
setting forth the aggregate number of Optional Shares to be purchased and the
date on which such Optional Shares are to be delivered, as determined by you but
in no event earlier than the First Time of Delivery (as defined in Section 4
hereof) or, unless you and the Company otherwise agree in writing, earlier than
two or later than ten business days after the date of such notice.

     3.   Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.

     4.   (a)  The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
Goldman, Sachs & Co., through the facilities of the Depository Trust Company,
("DTC") for the account of such Underwriter, against payment by or on behalf of
such Underwriter of the purchase price therefor by wire transfer, payable to the
order of the Company in federal (same day) funds.  The Company will cause the
certificates representing the Shares to be made available for checking and
packaging at least twenty-four hours prior to the Time of Delivery (as defined
below) with respect thereto at the office of DTC or its designated custodian
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 (the "Designated
Office").  The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York City time, on ............., 19.. or
such other time and date as Goldman, Sachs & Co. and the Company may agree upon
in writing, and, with respect to the Optional Shares, 9:30 a.m., New York time,
on the date specified by Goldman, Sachs & Co. in the written notice given by
Goldman, Sachs & Co. of the Underwriters' election to purchase such Optional
Shares, or such other time and date as Goldman, Sachs & Co. and the Company may
agree upon in writing.  Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".

          (b)  The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(j) hereof, will be delivered at the offices
of Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California 94304 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at such Time of Delivery.  A meeting will be held at the Closing Location at
 .......p.m., New York City time, on the New York Business Day next preceding
such Time of Delivery, or such other time as agreed to by counsel to the
Underwriters and counsel to the Company, at which meeting the final drafts of
the 


                                      -6-
<PAGE>

documents to be delivered pursuant to the preceding sentence will be 
available for review by the parties hereto.  For the purposes of this Section 
4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday, 
Thursday and Friday which is not a day on which banking institutions in New 
York are generally authorized or obligated by law or executive order to close.

     5.   The Company agrees with each of the Underwriters:

          (a)  To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
shall be reasonably disapproved by you promptly after reasonable notice thereof;
to advise you, promptly after it receives notice thereof, of the time when any
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or prospectus or
suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;

          (b)  Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;

          (c)  Prior to 10:00 a.m., New York City time, on the New York Business
Day next succeeding the date of this Agreement and from time to time, to furnish
the Underwriters with copies of the Prospectus in New York City in such
quantities as you may reasonably request, and, if the delivery of a prospectus
is required at any time prior to the expiration of nine months after the time of
issue of the Prospectus in connection with the offering or sale of the Shares
and if at such time any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and upon your request
to prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance, and in case any Underwriter is
required to deliver a prospectus in connection with sales of any of the Shares
at any time nine 


                                      -7-
<PAGE>

months or more after the time of issue of the Prospectus, upon your request 
but at the expense of such Underwriter, to prepare and deliver to such 
Underwriter as many copies as you may request of an amended or supplemented 
Prospectus complying with Section 10(a)(3) of the Act;

          (d)  To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
thereunder (including, at the option of the Company, Rule 158);

          (e)  During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of, except as provided
hereunder, any securities of the Company that are substantially similar to the
Shares, including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any such
substantially similar securities (other than pursuant to employee stock option
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement), without
your prior written consent;

          (f)  To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), consolidated summary financial information of
the Company and its subsidiaries for such quarter in reasonable detail;

          (g)  During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders generally or to the Commission);

          (h)  To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds";

          (i)  To use its best efforts to list for quotation the Shares on the
Nasdaq;

          (j)  If the Company elects to rely upon Rule 462(b), the Company shall
file a Rule 462(b) Registration Statement with the Commission in compliance with
Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of this Agreement,
and the Company shall at the time of filing either pay to the Commission the
filing fee for the Rule 462(b) Registration Statement or give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under the Act.


                                      -8-
<PAGE>

     6.   The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Selling Agreement, closing
documents (including compilations thereof)  and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky survey; (iv) all fees and
expenses in connection with listing the Shares on the Nasdaq; (v) the filing
fees incident to, and the fees and disbursements of counsel for the Underwriters
in connection with, securing any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Shares; (vi) the cost
of preparing stock certificates; (vii) the cost and charges of any transfer
agent or registrar; and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section.  It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Underwriters will
pay all of their own costs and expenses, including the fees of their counsel,
stock transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.

     7.   The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:

          (a)  The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the rules and regulations under the Act and in accordance with Section 5(a)
hereof; if the Company has elected to rely upon Rule 462(b), the Rule 462(b)
Registration Statement shall have become effective by 10:00 p.m., Washington
D.C. time, on the date of this Agreement; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;

          (b)  Wilson Sonsini Goodrich & Rosati, counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii), (vii),
(xi) and (xiii) of subsection (c) below as well as such other related matters as
you may reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;


                                      -9-
<PAGE>

          (c)  Morrison & Foerster LLP, counsel for the Company, shall have
furnished to you their written opinion (a draft of such opinion is attached as
Annex II(b) hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:

              (i)   The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus;

             (ii)   The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
(including the Shares being delivered at such Time of Delivery) have been duly
and validly authorized and issued and are fully paid and nonassessable; and the
Shares conform to the description of the Stock contained in the Prospectus;

            (iii)   The Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of failure to be so qualified in any such
jurisdiction (such counsel being entitled to rely in respect of the opinion in
this clause upon opinions of local counsel and in respect of matters of fact
upon certificates of officers of the Company, provided that such counsel shall
state that they believe that both you and they are justified in relying upon
such opinions and certificates, and that copies of such opinions and
certificates be provided to counsel for the Underwriters);

             (iv)   Each subsidiary of the Company listed on Annex III hereto
(collectively, the "Material Subsidiaries") has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation; and all of the issued shares of capital stock of
each such subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to rely in respect
of the opinion in this clause upon opinions of local counsel and in respect to
matters of fact upon certificates of officers of the Company or the Material
Subsidiaries, provided that such counsel shall state that they believe that both
you and they are justified in relying upon such opinions and certificates, and
that signed originals of such opinions and copies of such certificates be
provided to counsel for the Underwriters);

              (v)   The Company and the Material Subsidiaries have good and 
marketable title in fee simple to all real property owned by them, in each 
case free and clear of all liens, encumbrances and defects except such as are 
described in the Prospectus or such as do not materially affect the value of 
such property and do not interfere with the use made and proposed to be made 
of such property by the Company and the Material Subsidiaries; and any real 
property and buildings held under lease by the Company and the Material 
Subsidiaries are held by them under valid, subsisting and enforceable leases 
with such exceptions as are not material and do not interfere with the use 
made and proposed to be made of such property and buildings by the Company 
and the Material Subsidiaries (in giving the opinion in this clause, such 
counsel may state that no examination of record titles for the purpose of 
such opinion has been made, and that they are relying upon a general review 
of the 

                                      -10-
<PAGE>

titles of the Company and the Material Subsidiaries, upon opinions of local 
counsel and abstracts, reports and policies of title companies rendered or 
issued at or subsequent to the time of acquisition of such property by the 
Company or its subsidiaries, upon opinions of counsel to the lessors of such 
property and, in respect to matters of fact, upon certificates of officers of 
the Company or the Material Subsidiaries, provided that such counsel shall 
state that they believe that both you and they are justified in relying upon 
such opinions, abstracts, reports, policies and certificates, and that copies 
of such opinions and certificates be provided to counsel for the 
Underwriters);

             (vi)   To the best of such counsel's knowledge and other than as 
set forth in the Prospectus and herein, there are no legal or governmental 
proceedings pending to which the Company or any of the Material Subsidiaries 
is a party or of which any property of the Company or any of the Material 
Subsidiaries is the subject which, if determined adversely to the Company or 
any of its the Material Subsidiaries, would individually or in the aggregate 
have a material adverse effect on the current or future consolidated 
financial position, stockholders' equity or results of operations of the 
Company and its subsidiaries; and, to the best of such counsel's knowledge, 
no such proceedings are threatened or contemplated by governmental 
authorities or threatened by others;

            (vii)   This Agreement has been duly authorized, executed and
delivered by the Company;

           (viii)   The issue and sale of the Shares being delivered at such 
Time of Delivery by the Company and the compliance by the Company with all of 
the provisions of this Agreement and the consummation of the transactions 
herein contemplated will not conflict with or result in a breach or violation 
of any of the terms or provisions of, or constitute a default under, any 
indenture, mortgage, deed of trust, loan agreement or other agreement or 
instrument known to such counsel to which the Company or any of the Material 
Subsidiaries is a party or by which the Company or any of the Material 
Subsidiaries is bound or to which any of the property or assets of the 
Company or any of the Material Subsidiaries is subject, except for any such 
breach or violation that would not have a material adverse effect on the 
business, condition (financial or otherwise), results of operations and 
prospects of the Company and its subsidiaries, taken as a whole, nor will 
such action result in any violation of the provisions of the Certificate of 
Incorporation or By-laws of the Company or any statute or any order, rule or 
regulation known to such counsel of any court or governmental agency or body 
having jurisdiction over the Company or any of the Material Subsidiaries or 
any of their properties;

             (ix)   No consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body is
required for the issue and sale of the Shares or the consummation by the Company
of the transactions contemplated by this Agreement, except the registration
under the Act of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution of the Shares by
the Underwriters;

              (x)   Neither the Company nor any of the Material Subsidiaries 
is in violation of its Certificate of Incorporation or By-laws or in default 
in the performance or observance of any material obligation, agreement, 
covenant or condition contained in any indenture, mortgage, deed of trust, 
loan agreement known to such counsel, lease or other agreement or instrument 
to which it is a party or by which it or any of its properties may be bound, 
except for any such breach or violation that would not have a material 
adverse effect on the business, condition (financial 

                                      -11-
<PAGE>

or otherwise), results of operations and prospects of the Company and its 
subsidiaries, taken as a whole;

             (xi)   The statements set forth in the Prospectus under the caption
"Description of Capital Stock", insofar as they purport to constitute a summary
of the terms of the Stock, and under the caption "Underwriting," insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate, complete and fair;

            (xii)   The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act;

           (xiii)   Such counsel shall also state that the Registration
Statement and the Prospectus and any further amendments and supplements thereto
made by the Company prior to such Time of Delivery (other than the financial
statements and related schedules and the financial data therein, as to which
such counsel need express no opinion) comply as to form in all material respects
with the requirements of the Act and the rules and regulations thereunder,
although they do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, and have not independently checked and verified the accuracy and
fairness thereof except for those referred to in the opinion in subsection (xi)
of this Section 7(c); nothing has come to the attention of such counsel which
leads them to believe  that, as of its effective date, the Registration
Statement or any further amendment thereto made by the Company prior to such
Time of Delivery (other than the financial statements and related schedules and
the financial data therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that, as of its date, the Prospectus or any further amendment
or supplement thereto made by the Company prior to such Time of Delivery (other
than the financial statements and related schedules and the financial data
therein, as to which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further amendment or supplement
thereto made by the Company prior to such Time of Delivery (other than the
financial statements and related schedules and the financial data therein, as to
which such counsel need express no opinion) contains an untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and they do not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus which are not filed
or described as required;

            (xiv)   The Company has complied with all agreements or arrangements
known to such counsel after reasonable investigation which grant registration
rights to holders of the Company's securities; and, to the best of such
counsel's knowledge, there is no legal or beneficial owner of any securities of
the Company who has any rights, not effectively satisfied or waived, to require
registration of any shares of capital stock of the Company in connection with
the filing of the Registration Statement; and


                                      -12-
<PAGE>

             (xv)   To the best of such counsel's knowledge, neither the 
Company nor any of its subsidiaries has received any notice of infringement 
or conflict with asserted rights of others with respect to the any patents, 
patent licenses, trademarks, trade names, service marks, service names, 
copyrights and other intellectual property rights owned or licensed by the 
Company ("Intellectual Property") which, singly or in the aggregate, if the 
subject of any unfavorable decision, ruling or finding, would result in a 
material adverse effect on the business, financial condition or results of 
operations of the Company and its subsidiaries, taken as a whole; and, to the 
best of such counsel's knowledge, there are no judicial proceedings pending 
relating to the Intellectual Property to which the Company is a party or of 
which any property of the Company is subject, and, to the best of such 
counsel's knowledge, except as set forth in the Prospectus, no such judicial 
proceedings are threatened by the governmental authorities or others.

                    In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the State of
California, the General Corporation Law of the State of Delaware and the federal
laws of the United States of America.

          (d)  On the date of the Prospectus at a time prior to the execution of
this Agreement, at 9:30 a.m., New York City time, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, Ernst & Young LLP
shall have furnished to you a letter or letters, dated the respective dates of
delivery thereof, in form and substance reasonably satisfactory to you, to the
effect set forth in Annex I hereto (the executed copy of the letter delivered
pursuant to the execution of this Agreement is attached as Annex I(a) hereto and
a draft of the form of letter to be delivered on the effective date of any post-
effective amendment to the Registration Statement and as of each Time of
Delivery is attached as Annex I(b) hereto;

          (e)  (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock (except for stock options issued in the ordinary
course of business, or Stock issued upon exercise of stock options, since the
date of the Prospectus pursuant to stock option or incentive plans described in
the Prospectus) or long-term debt of the Company or any of its subsidiaries or
any change, or any development involving a prospective change, in or affecting
the general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any such case
described in Clause (i) or (ii), is in the judgment of the Representatives so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;


                                      -13-
<PAGE>

          (f)  On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on Nasdaq exchange on which the
Stock is or will be traded; (ii) a suspension or material limitation in trading
in the Company's securities on Nasdaq; (iii) a general moratorium on commercial
banking activities declared by either Federal or New York or California State
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this Clause (iv) in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the Prospectus;

          (g)  The Shares to be sold at such Time of Delivery shall have been
duly listed subject to notice of issuance for quotation on Nasdaq;

          (h)  The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of the stockholders and optionholders
of the Company, substantially to the effect set forth in Subsection 5(e) hereof
in form and substance satisfactory to you;

          (i)  The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and

          (j)  The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company satisfactory to
you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, as to the matters set forth in subsections (a) and (e) of this
Section and as to such other matters as you may reasonably request.

     8.   (a)  The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for any legal or
other expenses reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; PROVIDED, HOWEVER, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through Goldman, Sachs & Co. expressly for use therein.


                                      -14-
<PAGE>

          (b)  Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Goldman, Sachs
& Co. expressly for use therein; and will reimburse the Company for any legal or
other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.

          (c)  Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection.  In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation.  No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.

          (d)  If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares.  If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each 


                                      -15-
<PAGE>

indemnifying party shall contribute to such amount paid or payable by such 
indemnified party in such proportion as is appropriate to reflect not only 
such relative benefits but also the relative fault of the Company on the one 
hand and the Underwriters on the other in connection with the statements or 
omissions which resulted in such losses, claims, damages or liabilities (or 
actions in respect thereof), as well as any other relevant equitable 
considerations.  The relative benefits received by the Company on the one 
hand and the Underwriters on the other shall be deemed to be in the same 
proportion as the total net proceeds from the offering of the Shares 
purchased under this Agreement (before deducting expenses) received by the 
Company bear to the total underwriting discounts and commissions received by 
the Underwriters with respect to the Shares purchased under this Agreement, 
in each case as set forth in the table on the cover page of the Prospectus. 
The relative fault shall be determined by reference to, among other things, 
whether the untrue or alleged untrue statement of a material fact or the 
omission or alleged omission to state a material fact relates to information 
supplied by the Company on the one hand or the Underwriters on the other and 
the parties' relative intent, knowledge, access to information and 
opportunity to correct or prevent such statement or omission.  The Company 
and the Underwriters agree that it would not be just and equitable if 
contributions pursuant to this subsection (d) were determined by PRO RATA 
allocation (even if the Underwriters were treated as one entity for such 
purpose) or by any other method of allocation which does not take account of 
the equitable considerations referred to above in this subsection (d).  The 
amount paid or payable by an indemnified party as a result of the losses, 
claims, damages or liabilities (or actions in respect thereof) referred to 
above in this subsection (d) shall be deemed to include any legal or other 
expenses reasonably incurred by such indemnified party in connection with 
investigating or defending any such action or claim.  Notwithstanding the 
provisions of this subsection (d), no Underwriter shall be required to 
contribute any amount in excess of the amount by which the total price at 
which the Shares underwritten by it and distributed to the public were 
offered to the public exceeds the amount of any damages which such 
Underwriter has otherwise been required to pay by reason of such untrue or 
alleged untrue statement or omission or alleged omission.  No person guilty 
of fraudulent misrepresentation (within the meaning of Section 11(f) of the 
Act) shall be entitled to contribution from any person who was not guilty of 
such fraudulent misrepresentation.  The Underwriters' obligations in this 
subsection (d) to contribute are several in proportion to their respective 
underwriting obligations and not joint.

          (e)  The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.

     9.   (a)  If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein.  If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms.  In the event that,
within the respective prescribed periods, you notify the Company that you have
so arranged for the purchase of such Shares, or the Company notifies you that it
has so 


                                      -16-
<PAGE>

arranged for the purchase of such Shares, you or the Company shall have the 
right to postpone such Time of Delivery for a period of not more than seven 
days, in order to effect whatever changes may thereby be made necessary in 
the Registration Statement or the Prospectus, or in any other documents or 
arrangements, and the Company agrees to file promptly any amendments to the 
Registration Statement or the Prospectus which in your opinion may thereby be 
made necessary.  The term "Underwriter" as used in this Agreement shall 
include any person substituted under this Section with like effect as if such 
person had originally been a party to this Agreement with respect to such 
Shares.

          (b)  If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.

          (c)  If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such Time of Delivery, or if the Company shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company to sell the
Optional Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company, except for the expenses to be borne
by the Company and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.

     10.  The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company,
or any officer or director or controlling person of the Company, and shall
survive delivery of and payment for the Shares.

     11.  If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Underwriters through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the 


                                      -17-
<PAGE>

Shares not so delivered, but the Company shall then be under no further 
liability to any Underwriter in respect of the Shares not so delivered except 
as provided in Sections 6 and 8 hereof.

     12.  In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.

     All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York  10004, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Secretary; provided, however, that any notice
to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by
mail, telex or facsimile transmission to such Underwriter at its address set
forth in its Underwriters' Questionnaire, or telex constituting such
Questionnaire, which address will be supplied to the Company by you upon
request.  Any such statements, requests, notices or agreements shall take effect
at the time of receipt thereof.

     13.  This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and, to the extent provided in Sections 8 and
10 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement.  No purchaser of any of the
Shares from any Underwriter shall be deemed a successor or assign by reason
merely of such purchase.

     14.  Time shall be of the essence of this Agreement.  As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C.  is open for business.

     15.  This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.

     16.  This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

     If the foregoing is in accordance with your understanding, please sign 
and return to us one for the Company and for each of the Representatives plus 
one for each counsel counterparts hereof, and upon the acceptance hereof by 
you, on behalf of each of the Underwriters, this letter and such acceptance 
hereof shall constitute a binding agreement between each of the Underwriters 
and the Company. It is understood that your acceptance of this letter on 
behalf of each of the Underwriters is pursuant to the authority set forth in 
a form of Agreement among Underwriters (U.S. Version), the form of which 
shall be submitted to the Company for examination upon request, but without 
warranty on your part as to the authority of the signers thereof.

                                   Very truly yours,



                                      -18-
<PAGE>

                                   BEA Systems, Inc.


                                   By: _____________________________________

                                   Name: ___________________________________

                                   Title: __________________________________

Accepted as of the date hereof:

Goldman, Sachs & Co.
Alex. Brown & Sons Incorporated
Robertson, Stephens & Company
SoundView Financial Group, Inc.


By: ______________________________________
     (Goldman, Sachs & Co.)

     On behalf of each of the Underwriters


<PAGE>

                                   SCHEDULE I

                                                            NUMBER OF 
                                                             OPTIONAL 
                                                           SHARES TO BE 
                                     TOTAL NUMBER OF       PURCHASED IF 
                                       FIRM SHARES        MAXIMUM OPTION 
      UNDERWRITER                    TO BE PURCHASED        EXERCISED 
- ----------------------------------   ----------------     ---------------
Goldman, Sachs & Co. 
Alex. Brown & Sons Incorporated 
Robertson, Stephens & Company 
SoundView Financial Group, Inc. 
    Total 



<PAGE>

                                                                    ANNEX I


     Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:

    (i)   They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder;

   (ii)   In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim financial
statements, selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as indicated
in their reports thereon, copies of which have been furnished to the
representatives of the Underwriters (the "Representatives") and are attached
hereto;

  (iii)   They have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus as indicated in
their reports thereon copies of which have been separately furnished to the
Representatives and are attached hereto and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations, nothing
came to their attention that caused them to believe that the unaudited condensed
consolidated financial statements do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations;

   (iv)   The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years which were included
or incorporated by reference in the Company's Annual Reports on Form 10-K for
such fiscal years;

    (v)   They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as a
result of the foregoing procedures that caused them to believe that this
information does not conform in all material respects with the disclosure
requirements of Items 301, 302, 402 and 503(d), respectively, of Regulation S-K;


                                      I-1
<PAGE>

   (vi)   On the basis of limited procedures, not constituting an examination in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
in the Prospectus, inquiries of officials of the Company and its subsidiaries
responsible for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their attention
that caused them to believe that:

          (A)  (i) the unaudited consolidated statements of income, consolidated
balance sheets and consolidated statements of cash flows included in the
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the related published rules and
regulations, or (ii) any material modifications should be made to the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus for them to be
in conformity with generally accepted accounting principles;

          (B)  any other unaudited income statement data and balance sheet items
included in the Prospectus do not agree with the corresponding items in the
unaudited consolidated financial statements from which such data and items were
derived, and any such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding amounts in the
audited consolidated financial statements included in the Prospectus;

          (C)  the unaudited financial statements which were not included in the
Prospectus but from which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited income statement data and
balance sheet items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with the basis for the
audited consolidated financial statements included in the Prospectus;

          (D)  any unaudited pro forma consolidated condensed financial
statements included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published rules and regulations thereunder or the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of those
statements;

          (E)  as of a specified date not more than five days prior to the date
of such letter, there have been any changes in the consolidated capital stock
(other than issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and upon conversions
of convertible securities, in each case which were outstanding on the date of
the latest financial statements included in the Prospectus) or any increase in
the consolidated long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders' equity or other
items specified by the Representatives, or any increases in any items specified
by the Representatives, in each case as compared with amounts shown in the
latest balance sheet included in the Prospectus, except in each case for
changes, increases or decreases which the Prospectus discloses have occurred or
may occur or which are described in such letter; and


                                      I-2
<PAGE>

          (F)  for the period from the date of the latest financial statements
included in the Prospectus to the specified date referred to in Clause (E) there
were any decreases in consolidated net revenues or operating profit or the total
or per share amounts of consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the Representatives,
in each case as compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the Representatives,
except in each case for decreases or increases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and

  (vii)   In addition to the examination referred to in their report(s) included
in the Prospectus and the limited procedures, inspection of minute books,
inquiries and other procedures referred to in paragraphs (iii) and (vi) above,
they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus, or in  Part II
of, or in exhibits and schedules to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.



                                      I-3
<PAGE>

                                                                   ANNEX II


                       OPINION OF MORRISON & FOERSTER LLP






















                                      II-1
<PAGE>

                                                                   ANNEX III


                               MATERIAL SUBSIDIARIES



                                                  State or Country
           Name                                   of Incorporation    
- ------------------------------                  ------------------------

BEA Systems, Inc.                                      Delaware
Information Management Company                         Delaware
Independence Technologies, Inc.                        Delaware
BEA Systems OY                                         Finland
BEA Systems SA                                         France
BEA Systems AB                                         Sweden
BEA Systems Ltd.                                       United Kingdom




















                                      III-1

<PAGE>


                      RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                BEA SYSTEMS, INC.


                        Pursuant to Sections 242 and 245
                 of the General Corporation Law of the State of
                                    Delaware
                 _______________________________________________


     BEA SYSTEMS, INC. (the "Corporation"), a Corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"General Corporation Law") having filed its original Certificate of
Incorporation under the name BEA Enterprises, Inc. on January 20, 1995, does
hereby certify as follows:

     That the following resolutions amending and restating the Corporation's
Certificate of Incorporation were duly adopted by the Corporation's Board of
Directors and by the holders of a majority of the Corporation's outstanding
stock entitled to vote thereon and if required, a majority of each class
entitled to vote thereon as a class, in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law by written consent of the
Board of Directors and the stockholders given in accordance with Sections 141
and 228, respectively of the General Corporation Law:

     "NOW, THEREFORE, BE IT RESOLVED, that the Certificate of Incorporation
     of the Corporation be amended and restated in its entirety as follows:

          "FIRST:  The name of the corporation (hereinafter called the
"Corporation") is BEA Systems, Inc.

          SECOND:  The address, including street, number, city and county, of
the registered office of the Corporation in the State of Delaware is 32 
Loockerman Square, Suite L-100, City of Dover, 19901, County of Kent; and the 
name of the registered agent of the Corporation in the State of Delaware at 
such address is The Prentice-Hall Corporation System, Inc.

          THIRD:  The nature of the business and the purposes to be conducted 
and promoted by the Corporation shall be to conduct any lawful business, to 
promote any lawful purpose, and to engage in any lawful act or activity for 
which Corporations may be organized under the General Corporation Law of the 
State of Delaware.

          FOURTH:  The Corporation is authorized to issue two classes of 
shares, to be designated respectively Common Stock and Preferred Stock.  The 
total number of shares of Common Stock the Corporation shall have authority 
to issue is 115,000,000, of which 35,000,000 are hereby designated "Class B 
Common Stock". The total number of



<PAGE>


shares of Preferred Stock the Corporation shall have authority to issue is
40,000,000.  The par value of the Common Stock and the Preferred Stock shall be
$0.001 per share.

          A description of the respective classes and series of stock and a 
statement of the designations, preferences, voting powers, relative, 
participating, optional or other special rights and privileges and the 
qualifications, limitations and restrictions of the Preferred and Common 
Stock are as follows:

          1. DESIGNATION AND AMOUNT.  There shall be designated a Series A
Preferred Stock (the "Series A Preferred"), and the number of shares
constituting such series shall be 20,000,000, and there shall be designated a
Series B Preferred Stock (the "Series B Preferred"), and the number of shares
constituting such series shall be 20,000,000.  Shares of Series A Preferred and
Series B Preferred shall have a par value of $0.001 per share.

          2. DIVIDENDS AND DISTRIBUTIONS.

               (a) SERIES B PREFERRED.  Subject to the provisions for adjustment
hereinafter set forth, the holders of shares of Series B Preferred shall be
entitled to receive, when, as and if declared by the Board of Directors (the
"Board") out of funds legally available for the purpose, an annual cash dividend
in the amount of $.07 per share (adjusted to reflect any stock split, stock
dividend, combination, recapitalization and the like (collectively, a
"Recapitalization") with respect to the Series B Preferred), prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock) on the Series A Preferred or the Common Stock of the Corporation.
Such dividends shall be cumulative, and the right  to receive such shall accrue
to holders of Series B Preferred to the extent that such cumulative dividends
are not declared or paid in any year.

               (b) SERIES A PREFERRED.  Subject to the provisions for adjustment
hereinafter set forth and after all cumulative dividends payable with respect to
the Series B Preferred have been declared and paid in accordance with Section
2(a) above, the holders of Series A Preferred shall be entitled to receive,
when, as and if declared by the Board, out of funds legally available for the
purpose, an annual cash dividend in the amount of $.12 per share of Series A
Preferred (as adjusted to reflect any Recapitalization with respect to the
Series A Preferred), prior and in preference to any declaration or payment of
any dividend (payable other than in Common Stock) on the Common Stock of the
Corporation.  Such dividends shall not be cumulative, and no right shall accrue
to holders of Series A Preferred by reason of the fact that dividends on such
shares are not declared or paid in any year.

               (c) REPURCHASE OF COMMON.  Notwithstanding Sections 2(a) and 2(b)
hereof, the Corporation may at any time, out of funds legally available
therefor, repurchase shares of Common Stock of the Corporation (i) issued to or
held by employees, directors or consultants of the Corporation or its
subsidiaries upon termination of their employment or services, pursuant to any
agreement providing for


                                        2
<PAGE>


such right of repurchase, or (ii) issued to or held by any person subject to the
Corporation's right of first refusal to purchase such shares where the purchase
is pursuant to the exercise of such right of first refusal, in either case
whether or not dividends on the Preferred Stock shall have been declared and
paid or funds set aside therefor.

          3. LIQUIDATION RIGHTS.  In the event of any liquidation, 
dissolution or winding up of the Corporation, whether voluntary or 
involuntary, distributions shall be made to the holders of Series A Preferred 
and Series B Preferred in respect of such Series A Preferred and Series B 
Preferred before any amount shall be paid to the holders of Common Stock in 
respect of such Common Stock, in the following manner:

               (a) SERIES B PREFERRED.  The holders of Series B Preferred 
shall be entitled to be paid first out of the assets of the Corporation 
available for distribution to holders of its capital stock an amount per 
share equal to $1.00 per share of Series B Preferred, as adjusted to reflect 
any Recapitalization of the Series B Preferred, plus all cumulated and unpaid 
dividends, if any.  If, upon the occurrence of a liquidation, dissolution or 
winding up, the assets and funds to be  distributed among the holders of the 
Series B Preferred shall be insufficient to permit the payment to such 
holders of their full liquidation preferences, then the entire assets and 
funds of the Corporation legally available for distribution to the holders of 
capital stock shall be distributed ratably among the holders of the Series B 
Preferred such that the same percentage of the foregoing liquidation 
preference is paid to each such holder with respect to the shares of Series B 
Preferred such holder then holds.

               (b) SERIES A PREFERRED.  If assets are remaining after payment 
of the full preferential amount with respect to the Series B Preferred set 
forth in Section 3(a) above, the holders of the Series A Preferred shall be 
entitled to then be paid out of the assets of the Corporation an amount per 
share equal to $1.70 per share of Series A Preferred, as adjusted to reflect 
any Recapitalization of the Series A Preferred, plus all declared and unpaid 
dividends, if any.  If, upon the occurrence of a liquidation, dissolution or 
winding up, the assets and funds to be distributed among the holders of the 
Series A Preferred shall be insufficient to permit the payment to such 
holders of their full liquidation preferences, then the entire remaining 
assets and funds of the Corporation legally available for distribution to the 
holders of capital stock shall be distributed ratably among the holders of 
the Series A Preferred such that the same percentage of the foregoing 
liquidation preferences is paid to each such holder with respect to the 
shares of Series A Preferred each holder then holds.

               (c) COMMON STOCK.  If assets are remaining after payment of 
the full preferential amount with respect to the Series A Preferred and the 
Series B Preferred set forth in Sections 3(a) and 3(b) above, then the 
holders of the Common Stock shall be entitled to share ratably based upon 
their ownership of Common Stock in all such remaining assets and surplus 
funds.


                                        3
<PAGE>


               (d) EVENTS DEEMED A LIQUIDATION.  For purposes of this Section 
3, a liquidation, dissolution or winding up of the Corporation shall be 
deemed to be occasioned by and to include the consolidation or merger of the 
Corporation with or into any other Corporation or the sale or other transfer 
in a single transaction or a series of related transactions of all or 
substantially all of the assets of this Corporation, or any other 
reorganization of this Corporation unless the stockholders of the Corporation 
immediately prior to any such transaction are holders of a majority of the 
voting securities of the surviving or acquiring Corporation immediately 
thereafter (and for purposes of this calculation equity securities which any 
stockholder or the Corporation owned immediately prior to such merger or 
consolidation as a stockholder of another party to the transaction shall be 
disregarded).

               (e) VALUATION OF SECURITIES AND PROPERTY.  In the event the
Corporation proposes to distribute assets other than cash in connection with any
liquidation, dissolution or winding up of the Corporation, the value of the
assets to be distributed to the holders of shares of Series A Preferred and
Series B Preferred shall be determined in good faith by the Board.  Any
securities not subject to investment letter or similar restrictions on free
marketability shall be valued as follows:

                    (i)   If traded on a securities exchange, the value shall be
deemed to be the average of the security's closing prices on such exchange over
the thirty (30) day period ending three (3) days prior to the distribution;

                    (ii)  If actively traded over-the-counter, the value 
shall be deemed to be the average of the closing bid prices over the thirty 
(30) day period ending three (3) days prior to the distribution; and

                    (iii) If there is no active public market, the value shall
be the fair market value thereof as determined in good faith by the Board.

     The method of valuation of securities subject to investment letter or 
other restrictions on free marketability shall be adjusted to make an 
appropriate discount from the market value determined as above in clauses 
(i), (ii) or (iii) to reflect the fair market value thereof as determined in 
good faith by the Board.  The holders of at least 50% of the outstanding 
Series A Preferred and Series B Preferred, voting together as a single class, 
shall have the right to challenge any determination by the Board of fair 
market value pursuant to this Section 3(e), in which case the determination 
of fair market value shall be made by an independent appraiser selected 
jointly by the Board and the challenging parties, the cost of such appraisal 
to be borne equally by the Corporation and the challenging parties.


                                        4
<PAGE>


          4. REDEMPTION RIGHTS.

               (a) HOLDER'S REDEMPTION RIGHTS.

                    (i)   Each holder of Series B Preferred ("Series B 
Holder") shall have the right, exercisable at any time following September 
30, 2001 and upon written notice to the Corporation in accordance with 
Section 4(a)(iii) ("Redemption Notice"), to cause the Corporation to redeem, 
and the Corporation shall redeem (unless prevented by law), all or a portion 
of the shares of Series B Preferred then held by such Holder on such date 
designated by such Holder in accordance with Section 4(a)(iii) below 
("Designated Redemption Date").

                    (ii)  The price to be paid for each share of Series B
Preferred redeemed pursuant to this Section 4 shall be $1.00 per share, plus an
amount equal to all accrued and unpaid dividends (the "Redemption Price").

                    (iii) The redemption rights of each Series B Holder under
this Section 4(a) shall be exercised by providing written notice to the
Corporation at least ten (10) but not more than sixty (60) days prior to any
Designated Redemption Date.  From and after any Designated Redemption Date with
respect to which the redemption rights under this Section 4(a) have been
exercised, all dividends on shares of Series B Preferred to be redeemed pursuant
to this Section 4(a), shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation shall cease, except the right to
receive payment in full of the Redemption Price for such shares upon surrender
of certificates representing such shares.  Shares of the Series B Preferred
redeemed by the Corporation pursuant to this Section 4(a) shall be deemed
retired and may not under any circumstances thereafter be reissued or otherwise
disposed of by the Corporation.

                    (iv)  At any time on or after any Designated Redemption 
Date, the holders of the Series B Preferred Stock to be redeemed on such date 
shall be entitled to receive payment of the Redemption Price therefore upon 
actual delivery to the Corporation or its agents of the certificates 
representing the shares to be redeemed.  If upon any Designated Redemption 
Date the assets of the Corporation available for redemption shall be 
insufficient to pay all Series B Holders the full amounts to which they shall 
be entitled pursuant to this Section 4(a), the Corporation shall redeem on a 
PRO RATA basis such number of shares of the Series B Preferred as it shall 
have legally available funds to redeem, and the remainder of the shares of 
the Series B Preferred required to be redeemed shall be redeemed on the 
earliest practicable date next following the day on which the Corporation 
shall first have funds legally available for the redemption of such shares.  
On and after any Designated Redemption Date, all rights in respect of the 
shares of the Series B Preferred to be redeemed, except the right to receive 
the Redemption Price as herein provided, shall cease and terminate (unless 
default shall be made by the Corporation in the payment of the Redemption 
Price as herein provided, in which event such rights shall be exercisable 
until such default is cured), and such


                                        5
<PAGE>


shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation.

               (b) MANDATORY REDEMPTION ON INITIAL PUBLIC OFFERING.


                    (i)   Upon the closing of the Initial Public Offering (as
defined in Section 5(b) below), each share of Series B Preferred, unless the
holder thereof shall elect to convert such holder's Series B Preferred as of
such closing pursuant to Section 5(c) below, shall be redeemed by the
Corporation (unless the Corporation is prevented by law from effecting such
redemption).  To the extent shares of Series B Preferred are to be redeemed at a
later date pursuant to any provision of this Section 4, such redemption shall be
accelerated pursuant to this Section 4(b) and occur as of the Closing of the
Initial Public Offering.

                    (ii)  The price to be paid for each share of Series B
Preferred redeemed pursuant to this Section 4(b) shall be the Redemption Price.

                    (iii) At any time on or after the Initial Public Offering,
the holders of record of shares of the Series B Preferred to be redeemed on any
such date shall be entitled to receive payment of the Redemption Price for the
shares being redeemed upon actual delivery to the Corporation or its agents of
the certificates representing the shares to be redeemed.

                    (iv)  If upon any Initial Public Offering the assets of the
Corporation available for redemption shall be insufficient to pay all holders of
the Series B Preferred the full amounts to which they shall be entitled pursuant
to this Section 4(b), the Corporation shall redeem on a PRO RATA basis such
number of shares of the Series B Preferred as it shall have legally available
funds to redeem, and the remainder of the shares of the Series B Preferred
required to be redeemed shall be redeemed on the earliest practicable date next
following the day on which the Corporation shall first have funds legally
available for the redemption of such shares.  On and after the Initial Public
Offering, all rights in respect of the shares of the Series B Preferred to be
redeemed, except the right to receive the Redemption Price as herein provided,
shall cease and terminate (unless default shall be made by the Corporation in
payment of the Initial Public Offering Price as herein provided, in which event
such rights shall be exercisable until such default is cured), and such shares
shall no longer be deemed to be outstanding, whether or not the certificates
representing such shares have been received by the Corporation.

               (c) CORPORATION'S REDEMPTION RIGHTS.

                    (i)   The Corporation, at its option, may redeem, at any 
time and from time to time, any or all of the outstanding shares of the 
Series B Preferred (any such date being referred to as a "Designated 
Redemption Date"). Any proposed redemption of shares of the Series B 
Preferred pursuant to this Section 4(c) may be made only if prior notice is 
given by the Corporation, at least 30 but not more than 60 days


                                        6
<PAGE>


prior to the applicable Redemption Date, to all holders of record of shares of
the Series B Preferred Stock at their respective addresses appearing on the
books of the Corporation.  Such notice shall specify (i) the number of shares
being redeemed, and (ii) the Designated Redemption Date.  From and after the
Designated Redemption Date, all dividends upon the shares of the Series B
Preferred to be redeemed shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation, shall cease except the right to
receive payment in full of the applicable Redemption Price.

                    (ii)  The price to be paid for each share of the Series B
Preferred to be redeemed pursuant to this Section 4(c) shall be the Redemption
Price.  Redemptions of less than all of the outstanding shares of the Series B
Preferred pursuant to this Section 4(c) shall be made PRO RATA among all Series
B Holders.  Shares of the Series B Preferred redeemed by the Corporation
pursuant to this Section 4(c) shall be deemed retired and may not under any
circumstances thereafter be reissued or otherwise disposed of by the
Corporation.
                    (iii) At any time on or after any Designated Redemption
Date, the Series B Holders as to those shares of the Series B Preferred to be
redeemed on any such date shall be entitled to receive payment of the Redemption
Price for the shares being redeemed upon actual delivery to the Corporation or
its agents of the certificates representing the shares to be redeemed.

                    (iv)  If upon any Designated Redemption Date the assets of
the Corporation available for redemption shall be insufficient to pay all
holders of the Series B Preferred the full amounts to which they shall be
entitled pursuant to this Section 4(c), the Corporation shall redeem on a PRO
RATA basis such number of shares of the Series B Preferred as it shall have
legally available funds to redeem, and the remainder of the shares of the
Series B Preferred required to be redeemed shall be redeemed on the earliest
practicable date next following the day on which the Corporation shall first
have funds legally available for the redemption of such shares.  On and after
the Designated Redemption Date, all rights in respect of the shares of the
Series B Preferred to be redeemed, except the right to receive the Redemption
Price as herein provided, shall cease and terminate (unless default shall be
made by the Corporation in payment of the Redemption Price as herein provided,
in which event such rights shall be exercisable until such default is cured),
and such shares shall no longer be deemed to be outstanding, whether or not the
certificates representing such shares have been received by the Corporation.

          5. CONVERSION.  The holders of the Series A Preferred and the Series B
Preferred have conversion rights as follows (the "Conversion Rights"):

               (a) RIGHT TO CONVERT SERIES A PREFERRED.  Subject to Section 5(d)
below, each share of Series A Preferred shall initially be convertible, at the
option of the holder thereof, at any time after the date of issuance of such
share at the office of the Corporation or any transfer agent for the Series A
Preferred into the number


                                        7
<PAGE>


of fully paid and non-assessable shares of Common Stock which results from
dividing the Series A Conversion Price (as hereinafter defined) per share in
effect at the time of conversion into the per share Conversion Value (as
hereinafter defined) of such series.  The initial Conversion Price shall be
$1.70, and the Conversion Value of the Series A Preferred shall be $1.70.  The
initial Series A Conversion Price shall be subject to adjustment from time to
time as provided in Section 5(f) hereof.  Upon conversion, all declared and
unpaid dividends on the Series A Preferred shall be paid in cash, to the extent
legally permitted.

               (b) AUTOMATIC CONVERSION OF SERIES A PREFERRED.  Subject to
Section 5(d) below, each share of Series A Preferred shall automatically be
converted into shares of Common Stock upon (i) the closing the Initial Public
Offering involving the sale of securities for the account of the Corporation to
the public, the gross proceeds of which exceed $10,000,000 at a price to the
public of at least $5.00 per share (appropriately adjusted for any
Recapitalization of the Common Stock), or (ii) the written consent of holders of
not less than two-thirds (2/3) of the then-outstanding shares of Series A
Preferred.  For purposes of this Section 5 and Section 4 above, the "Initial
Public Offering" shall mean the first firm commitment underwritten public
offering of the Common Stock of the Corporation pursuant to an effective
registration statement declared effective under the Securities Act of 1933, as
amended (other than a registration effected by the Corporation in connection
with an employee benefit plan or a Rule 145 transaction, as defined in Rule 145
of the Securities and Exchange Commission).

               (c) RIGHT TO CONVERT SERIES B PREFERRED.  Subject to Section 5(d)
below, each share of Series B Preferred shall be convertible, at the option of
the holder thereof, at any time after the date of issuance of such share and on
or prior to the fifth (5th) day prior to the Redemption Date fixed by the
Redemption Notice at the office of the Corporation or any transfer agent for the
Series B Preferred into the number of fully paid and non-assessable shares of
Common Stock which results from dividing the Series B Liquidation Amount (as
hereinafter defined) by the Series B Conversion Value (as hereinafter defined).
The Series B Liquidation Amount shall be the full amount then distributable with
respect to each share of Series B Preferred pursuant to Section 3(a) hereof upon
a liquidation, dissolution or winding up of the Corporation.  The Series B
Conversion Value shall be: (i) in the event of any conversion as of the closing
of the Initial Public Offering, an amount equal to the gross proceeds per share
of Common Stock paid to the Company (as reduced for underwriter commissions and
discounts as calculated on a per share basis) pursuant to the Initial Public
Offering; and (ii) in the event of a conversion not subject to the preceding
clause (i), the fair market value of a share of the Company's Common Stock, as
is determined in good faith by the Board as of the date of such conversion.

               (d) CONVERSION TO CLASS B COMMON STOCK.  Notwithstanding any 
term or condition of this Section 5 and in the event of any voluntary or 
automatic conversion pursuant to Section 5(a), 5(b) or 5(c) above of any 
shares of Series A Preferred Stock or Series B Preferred Stock by a holder 
thereof who, after giving effect to

                                        8
<PAGE>


such conversion, will hold, in combination with any Affiliates (as defined in
Section 10(b)(vii)(A) hereof) more than forty-nine percent (49%) (by voting
power) of the total number of Voting Shares (as defined in Section 10(b)(vii)(D)
hereof) then issued and outstanding, each share of Series A Preferred Stock or
Series B Preferred Stock, which would be converted into Common Stock that would,
in combination with all other Voting Stock held by such holder and its
Affiliates, represent Voting Stock in excess of said forty-nine percent (49%)
amount, shall be convertible into that number of shares of Class B Common Stock
equal to and in lieu of that number of shares of Common Stock into which such
share of Series A Preferred Stock or Series B Preferred Stock would otherwise be
convertible pursuant to this Section 5.  In such event and as to any such shares
of Class B Common Stock issuable upon conversion of Series A Preferred Stock and
Series B Preferred Stock, references to Common Stock in this Section 5 shall be
deemed to refer to Class B Common Stock.

               (e) MECHANICS OF CONVERSION.  Before any holder of Series A 
Preferred or Series B Preferred shall be entitled to convert the same into 
shares of Common Stock and to receive certificates therefor, such holder 
shall surrender the certificate or certificates therefor, duly endorsed, at 
the office of the Corporation or of any transfer agent for the Series A 
Preferred, and shall give written notice to the Corporation at such office 
that such holder elects to convert the same; provided, however, that in the 
event of an automatic conversion pursuant to Section 5(b) hereof, the 
outstanding shares of Series A Preferred shall be converted automatically 
without any further action by the holders of such shares and whether or not 
the certificates representing such shares are surrendered to the Corporation 
or its transfer agent; and provided further that the Corporation shall not be 
obligated to issue certificates evidencing the shares of Common Stock 
issuable upon such automatic conversion unless and until the certificates 
evidencing such shares of Series A Preferred are either delivered to the 
Corporation or its transfer agent as provided above, or the holder notifies 
the Corporation or its transfer agent that such certificates have been lost, 
stolen or destroyed and executes an agreement satisfactory to the Corporation 
to indemnify the Corporation from any loss incurred by it in connection with 
such certificates.  The Corporation shall, as soon as practicable after such 
delivery, or after such agreement and indemnification, issue and deliver at 
such office to such holder of Series A Preferred, a certificate or 
certificates for the number of shares of Common Stock to which he or she 
shall be entitled as aforesaid and a check payable to the holder in the 
amount of any declared and unpaid dividends payable pursuant to Section 5(a) 
hereof, if any.  Such conversion shall be deemed to have been made 
immediately prior to the close of business on the date of such surrender of 
the shares of Series A Preferred or Series B Preferred to be converted, or, 
in the case of automatic conversion, immediately prior to the occurrence of 
the event leading to such automatic conversion, and the person or persons 
entitled to receive the shares of Common Stock issuable upon such conversion 
shall be treated for all purposes as the record holder or holders of such 
shares of Common Stock on such date.


                                        9
<PAGE>


               (f) ADJUSTMENTS TO SERIES A CONVERSION PRICE.

                    (i) SPECIAL DEFINITIONS.  For purposes of this Section 5, 
the following definitions shall apply:

                         (1)  'OPTIONS' shall mean rights, options or 
warrants to subscribe for, purchase or otherwise acquire either Common Stock 
or Convertible Securities.

                         (2)  CONVERTIBLE SECURITIES' shall mean any 
evidences of indebtedness, shares or other securities convertible into or 
exchangeable for Common Stock.

                         (3)  'ADDITIONAL SHARES OF COMMON' shall mean all 
shares of Common Stock issued (or, pursuant to Section 5(f)(iii), deemed to 
be issued) by the Corporation after the Series A Original Issue Date, other 
than shares of Common Stock issued or issuable:

                              (A)  upon conversion of shares of Series A 
Preferred or Series B Preferred;

                              (B)  to officers, directors or employees of, or
consultants to, the Corporation pursuant to a stock grant, option plan or
purchase plan or other employee stock incentive program or agreement approved by
the Board, not to exceed 9,600,000 shares (which amount of shares gives effect
to any stock split or other change in the Common Stock of the Corporation
through the Filing Date (as defined in Section 11(b)(vii)(B) below)), net of
repurchases and cancellations and expirations (without exercise) of options,
since the incorporation of the Corporation;

                              (C)  as a dividend or distribution on Series A
Preferred or Series B Preferred;

                              (D)  in a transaction described in Section
5(f)(vi); or

                              (E)  by way of dividend or other distribution 
on shares of Common Stock excluded from the definition of Additional Shares 
of Common by the foregoing clauses (A), (B), (C), (D) or this clause (E).

                    (ii) 'SERIES A ORIGINAL ISSUE DATE' shall mean the first 
date upon which a share of Series A Preferred shall be issued by the 
Corporation.

                    (iii) NO ADJUSTMENT OF SERIES A CONVERSION PRICE.  No 
adjustment in the Conversion Price of the Series A Preferred shall be made in 
respect of the issuance of Additional Shares of Common unless the 
consideration per share for an Additional Share of Common issued or deemed to 
be issued by the Corporation is less


                                       10
<PAGE>


than the Series A Conversion Price, in effect on the date of, and immediately
prior to, such issue.

                    (iv) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON.

                         (1)  OPTIONS AND CONVERTIBLE SECURITIES.  In the 
event the Corporation at any time or from time to time after the Series A 
Original Issue Date shall issue any Options or Convertible Securities or 
shall fix a record date for the determination of holders of any class of 
securities entitled to receive any such Options or Convertible Securities, 
then the maximum number of shares (as set forth in the instrument relating 
thereto without regard to any provisions contained therein for a subsequent 
adjustment of such number) of Common Stock issuable upon the exercise of such 
Options or, in the case of Convertible Securities and Options therefor, the 
exercise of such Options and conversion or exchange of such Convertible 
Securities shall be deemed to be Additional Shares of Common issued as of the 
time of such issue or, in case such a record date shall have been fixed, as 
of the close of business on such record date, provided that Additional Shares 
of Common shall not be deemed to have been issued unless the consideration 
per share (determined pursuant to Section 5(f)(v) hereof) of such Additional 
Shares of Common would be less than the Conversion Price in effect on the 
date of and immediately prior to such issue, or such record date, as the case 
may be, and provided further that in any such case in which Additional Shares 
of Common are deemed to be issued:

                              (A)  except as provided in Section 5(f)(iii), no
further adjustment in the Conversion Price shall be made upon the subsequent
issue of Convertible Securities or shares of Common Stock upon the exercise of
such Options or conversion or exchange of such Convertible Securities;

                              (B)  if such Options or Convertible Securities 
by their terms provide, with the passage of time or otherwise, for any change 
in the consideration payable to the Corporation, or change in the number of 
shares of Common Stock issuable, upon the exercise, conversion or exchange 
thereof (other than under or by reason of provisions designed to protect 
against dilution), the Conversion Price computed upon the original issue 
thereof (or upon the occurrence of a record date with respect thereto) and 
any subsequent adjustments based thereon, shall, upon any such increase or 
decrease becoming effective, be recomputed to reflect such increase or 
decrease insofar as it affects such Options or the rights of conversion or 
exchange under such Convertible Securities; and

                              (C)  no readjustment pursuant to clause (B) 
above shall have the effect of increasing the Series A Conversion Price to an 
amount which exceeds the lower of (1) the Series A Conversion Price on the 
original adjustment date or (2) the Series A Conversion Price that would have 
resulted from any issuance of Additional Shares of Common between the 
original adjustment date and such readjustment date.


                                       11
<PAGE>


                    (v) ADJUSTMENT OF SERIES A CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON.  In the event this Corporation shall issue
Additional Shares of Common (including Additional Shares of Common deemed to be
issued pursuant to Section 5(f)(iii)) after the Series A Original Issue Date
without consideration or for a consideration per share less than the Series A
Conversion Price in effect on the date of and immediately prior to such issue
(such issuance price being referred to herein as the "Dilution Price"), then and
in each such event the Series A Conversion Price of the Series A Preferred or
the Series B Preferred, as applicable, shall be reduced to a price (calculated
to the nearest cent) determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of Common
Stock which the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common so issued would purchase at such
Conversion Price; and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such issue plus the number of such
Additional Shares of Common so issued; provided that, for the purposes of this
Section 5(f)(iv), all shares of Common Stock issuable upon conversion of all
outstanding Series A Preferred and Series B Preferred and all outstanding
Options (provided such Options have an exercise price below the Series A
Conversion Price, immediately prior to such issue) and Convertible Securities
shall be deemed to be outstanding, and, immediately after any Additional Shares
of Common are deemed issued pursuant to Section 5(f)(iii), such Additional
Shares of Common shall be deemed to be outstanding.

                    (vi) DETERMINATION OF CONSIDERATION.  For purposes of 
this Section 5(f), the consideration received by the Corporation for the 
issue of any Additional Shares of Common shall be computed as follows:

                         (1)  CASH AND PROPERTY:  Such consideration shall:

                              (A)  insofar as it consists of cash, be 
computed at the aggregate amount of cash received by the Corporation;

                              (B)  insofar as it consists of property other 
than cash, be computed at the fair value thereof at the time of such issue, 
as determined by Board in the good faith exercise of its reasonable business 
judgment; and

                              (C)  in the event Additional Shares of Common are
issued together with other shares or securities or other assets of the
Corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.

                         (2)  OPTIONS AND CONVERTIBLE SECURITIES.  The 
consideration per share received by the Corporation for Additional Shares of 
Common


                                       12
<PAGE>


deemed to have been issued pursuant to Section 5(f)(iii)(1), relating to Options
and Convertible Securities, shall be determined by dividing

                              (A)  the total amount, if any, received or 
receivable by the Corporation as consideration for the issue of such Options 
or Convertible Securities, plus the minimum aggregate amount of additional 
consideration (as set forth in the instruments relating thereto, without 
regard to any provision contained therein for a subsequent adjustment of such 
consideration) payable to the Corporation upon the exercise of such Options 
or the conversion or exchange of such Convertible Securities, or in the case 
of Options for Convertible Securities, the exercise of such Options for 
Convertible Securities and the conversion or exchange of such Convertible 
Securities, by

                              (B)  the maximum number of shares of Common 
Stock (as set forth in the instruments relating thereto, without regard to 
any provision contained therein for a subsequent adjustment of such number) 
issuable upon the exercise of such Options or the conversion or exchange of 
such Convertible Securities.

                    (vii) OTHER ADJUSTMENTS TO SERIES A CONVERSION PRICE.

                         (1)  SUBDIVISIONS, COMBINATIONS, OR CONSOLIDATIONS 
OF COMMON STOCK.  In the event the outstanding shares of Common Stock shall 
be subdivided, combined or consolidated, by stock split, stock dividend, 
combination or like event, into a greater or lesser number of shares of 
Common Stock after the Series A Original Issue Date, the Series A Conversion 
Price in effect immediately prior to such subdivision, combination, 
consolidation or stock dividend shall, concurrently with the effectiveness of 
such subdivision, combination or consolidation, be proportionately adjusted.

                         (2)  DISTRIBUTIONS OTHER THAN CASH DIVIDENDS OUT OF 
RETAINED EARNINGS.  In case the Corporation shall distribute to holders of 
its Common Stock shares of its capital stock (other than Common Stock), stock 
or other securities of other persons, evidences of indebtedness issued by the 
Corporation or other persons, assets (excluding cash dividends) or options or 
rights (excluding options to purchase and rights to subscribe for Common 
Stock or other securities of the Corporation convertible into or exchangeable 
for Common Stock) after the Series A Original Issue Date, then, in each such 
case, the holders of shares of Series A Preferred shall, concurrently with 
the distribution to holders of Common Stock, receive a like distribution 
based upon the number of shares of Common Stock into which the Series A of 
Preferred is then convertible.

                         (3)  RECLASSIFICATIONS.  In the case, at any time 
after the Series A Original Issue Date, of any capital reorganization or any 
reclassification of the stock of the Corporation (other than as a result of a 
stock dividend or subdivision, split-up or combination of shares), or the 
consolidation or merger of the Corporation with


                                       13
<PAGE>


or into another person (other than a consolidation or merger in which the
Corporation is the continuing entity and which does not result in any change in
the Common Stock or which is treated as a liquidation pursuant to Section 3(c)),
or of the sale or other disposition of all or substantially all the properties
and assets of the Corporation, the shares of the Series A Preferred shall, after
such reorganization, reclassification, consolidation, merger, sale or other
disposition, be convertible into the kind and number of shares of stock or other
securities or property of the Corporation or otherwise to which such holder
would have been entitled if immediately prior to such reorganization,
reclassification, consolidation, merger, sale or other disposition he had
converted his shares of the Series A Preferred or Series B Preferred into Common
Stock.  The provisions of this clause 5(f)(vi)(3) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales or
other dispositions.

               (g) CERTIFICATE AS TO ADJUSTMENTS.  Upon the occurrence 
of each adjustment or readjustment of the Series A Conversion Price pursuant 
to this Section 5, the Corporation at its expense shall promptly compute such 
adjustment or readjustment in accordance with the terms hereof and furnish to 
each holder of Series A Preferred a certificate setting forth such adjustment 
or readjustment and showing in detail the facts upon which such adjustment or 
readjustment is based.  The Corporation shall, upon the written request at 
any time of any holder of Series A Preferred, furnish or cause to be 
furnished to such holder a like certificate setting forth (i) such 
adjustments and readjustments, (ii) the Series A Conversion Price at the time 
in effect, and (iii) the number of shares of Common Stock and the amount, if 
any, of other property which at the time would be received upon the 
conversion of the Series A Preferred.

               (h) STATUS OF CONVERTED STOCK.  In case any shares of 
Series A Preferred or Series B Preferred shall be converted pursuant to 
Section 5 hereof, the shares so converted shall be canceled, shall not be 
reissuable and shall cease to be a part of the authorized capital stock of 
the Corporation.

               (i) FRACTIONAL SHARES.  In lieu of any fractional shares 
to which the holder of Series A Preferred or Series B Preferred would 
otherwise be entitled upon conversion, the Corporation shall pay cash equal 
to such fraction multiplied by the fair market value of one share of Common 
Stock as determined by the Board.  The number of whole shares issuable to 
each holder upon such conversion shall be determined on the basis of the 
number of shares of Common Stock issuable upon conversion of the total number 
of shares of Series A Preferred and Series B Preferred held by such holder at 
the time of converting into Common Stock.

               (j) MISCELLANEOUS.

                    (i) All calculations under this Section 5 shall be 
made to the nearest cent or to the nearest one hundredth (1/100) of a share, 
as the case may be.

                    (ii) The holders of at least 50% of the outstanding 
Series A Preferred, each such Series having the right to act and vote 
separately as a class,

                                       14
<PAGE>


shall have the right to challenge any determination by the Board of fair value
pursuant to this Section 5, in which case such determination of fair value shall
be made by an independent appraiser selected jointly by the Board and the
challenging parties, the cost of such appraisal to be borne equally by the
Corporation and the challenging parties.

                    (iii) No adjustment in the Series A Conversion Price 
of the Series A Preferred need be made if such adjustment would result in a 
change in such Conversion Price of less than $0.01.  Any adjustment of less 
than $0.01 which is not made shall be carried forward and shall be made at 
the time of and together with any subsequent adjustment which, on a 
cumulative basis, amounts to an adjustment of $0.01 or more in such Series A 
Conversion Price.

               (k) NO IMPAIRMENT.  The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 5 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of Series A Preferred or Series B Preferred
against impairment.

               (l) RESERVATION OF STOCK ISSUABLE UPON CONVERSION.  The 
Corporation shall at all times reserve and keep available out of its 
authorized but unissued shares of Common Stock and Class B Common Stock, 
solely for the purpose of effecting the conversion of the shares of Series A 
Preferred and Series B Preferred, such number of its shares of Common Stock 
and Class B Common Stock as shall from time to time be sufficient to effect 
the conversion of all outstanding shares of Series A Preferred and Series B 
Preferred.  If at any time the number of authorized but unissued shares of 
Common Stock or Class B Common Stock shall not be sufficient to effect the 
conversion of all then-outstanding shares of Series A Preferred and Series B 
Preferred, the Corporation will take such corporate action as may, in the 
opinion of its counsel, be necessary to increase its authorized but unissued 
shares of Common Stock and Class B Common Stock to such number of shares as 
shall be sufficient for such purpose.

          6. VOTING RIGHTS.  Except as otherwise required by law or by 
Section 9 hereof, the holder of each share of Common Stock issued and 
outstanding shall have one vote, and the holder of each share of Series A 
Preferred  issued and outstanding shall be entitled to the number of votes 
equal to the number of shares of Common Stock into which such share of Series 
A Preferred could be converted at the record date for determination of the 
stockholders entitled to vote on such matters, or, if no such record date is 
established, at the date such vote is taken or any written consent of 
stockholders is solicited, such votes to be counted together with all other 
shares of stock of the Corporation having general voting power and not 
separately as a class.  Except as otherwise required by law or by Section 9 
hereof, the Series B Preferred shall be non-voting stock of the Corporation.  
Fractional votes by the holders of Series A Preferred

                                       15
<PAGE>


shall not, however, be permitted, and any fractional voting rights shall (after
aggregating all shares into which shares of Series A Preferred held by each
holder could be converted) be rounded to the nearest whole number.

          7. NOTICES OF RECORD DATE.  In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series A Preferred or Series B Preferred, at least
twenty (20) days prior to the date specified therein, a notice specifying the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right.

          8. NOTICES.  Any notice required by the provisions of the Certificate
to be given to the holders of Series A Preferred and Series B Preferred shall be
deemed given when deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his or her address appearing on the books
of this Corporation.

          9. PROTECTIVE PROVISIONS.

               (a) SERIES A PREFERRED.  So long as any shares of Series A
Preferred are outstanding, the Corporation shall not, without first obtaining
the approval of the holders of at least a majority of the then-outstanding
shares of such series, voting as a separate class, take any action that:

                    (i) alters the rights, preferences or privileges of such
series;

                    (ii) creates any new class or series of shares that has a
preference over or is on a parity with such series with respect to voting,
dividends or liquidation preferences;

                    (iii) reclassifies stock into shares having a preference
over or on a parity with such series with respect to voting, dividends or
liquidation preferences;

                    (iv) repurchases, redeems or retires any shares of capital
stock of the Corporation other than pursuant to contractual rights to repurchase
shares of Common Stock held by employees, directors or consultants of the
Corporation or its subsidiaries upon termination of their employment or services
or pursuant to the exercise of a contractual right of first refusal held by the
Corporation;

                    (v) results in the consolidation or merger with or into any
other Corporation or the sale or other transfer in a single transaction or a
series of


                                       16
<PAGE>


related transactions of all or substantially all of the assets of this
Corporation, or otherwise results in the reorganization of this Corporation
unless the stockholders of this Corporation immediately prior to any such
transaction are holders of a majority of the voting securities of the surviving
or acquiring Corporation immediately thereafter (and for purposes of this
calculation equity securities which any stockholder or the Corporation owned
immediately prior to such merger or consolidation as a stockholder of another
party to the transaction shall be disregarded);

                    (vi) materially alters or changes the business of the
Corporation; or

                    (vii) increases the authorized number of directors as set
forth in the Bylaws of the Corporation.

          (b) SERIES B PREFERRED.  So long as any shares of Series B Preferred
are outstanding, the Corporation shall not, without first obtaining the approval
of the holders of at least a majority of the then-outstanding shares of such
series, voting as a separate class, take any action that:

                    (i)  alters the rights, preferences or privileges of such
series;

                    (ii) creates any new class or series of shares that has a
preference over or is on a parity with such series with respect to dividends or
liquidation preferences; or

                    (iii) reclassifies stock into shares having a preference
over or on a parity with respect to dividends or liquidation preferences.

          10. CLASS B COMMON STOCK.  Subject to the conversion and voting rights
of the Class B Common Stock described below, the rights (including, but not
limited to, rights to dividends), preferences, privileges and restrictions of
the Common Stock and the Class B Common Stock shall be identical in all
respects, except as follows:

               (a) VOTING RIGHTS.  Holders of Class B Common Stock shall not be
entitled to vote such shares for the election of directors or on any other
matter except changes or amendment to this Section 10; PROVIDED, HOWEVER, that
no such change or amendment shall increase the rights of or, under any
circumstances, provide additional voting rights to the holders of Class B Common
Stock.
               (b) CONVERSION.

                    (i) RIGHT TO CONVERT.  The holder of any shares of Class B
Common Stock shall have the right at such holder's option, at any time or from
time to time, to convert any shares of Class B Common stock held by such holder,
so long as, after giving effect to such conversion, the total number of Voting
Shares (as defined in


                                       17
<PAGE>


Section 10(b)(vii)(D) hereof) held by such holder or any Affiliate (as defined
in Section 10(b)(vii)(A) hereof) of such holder shall be less than or equal to
forty-nine percent (49%) (by voting power) of the total number of Voting Shares
then issued and outstanding, into such whole number of shares of Common Stock as
shall be obtained by multiplying the number of shares of Class B Common Stock
being converted by the Class B Common Stock Conversion Rate (as hereinafter
defined), by surrender of the certificates representing the shares of Class B
Common Stock so to be converted in the manner provided in Section 10(b)(iii)
hereof The Class B Common Stock Conversion Rate shall be one (1) divided by the
Class B Common Stock Conversion Price (as hereinafter defined).  The Class B
Common Stock Conversion Price shall initially be one (1); PROVIDED, HOWEVER,
that such Class B Common Stock Conversion Price shall be subject to adjustment
as set forth in Section 10(b)(v) hereof.  No conversion of shares of Class B
Common Stock that would have the effect of giving the holder or any Affiliate of
such holder a number of Voting Shares greater than forty-nine percent (49%) (by
voting power) of the total number of Voting Shares then issued and outstanding
shall be effected pursuant to this Section 10(b)(i).  The holder of any shares
of Class B Common Stock exercising the aforesaid right to convert such shares
into shares of Common Stock shall be entitled to payment of all declared but
unpaid dividends, if any, payable on or with respect to such shares of Class B
Common Stock up to and including the Class B Common Conversion Date (as
hereinafter defined).

                    (ii) CONVERSION UPON TRANSFER.  Upon any Transfer (as
defined in Section 10(b)(vii)(C) hereof) of any shares of Class B Common Stock
by the original holder thereof, other than a Transfer to an Affiliate of such
original holder, such shares of Class B Common stock so Transferred shall, by
virtue of, and simultaneously with, the occurrence of the Transfer, without any
action on the part of the transferee, be automatically converted into such whole
number of fully paid and nonassessable shares of Common Stock as shall be
obtained by multiplying the number of shares of Class B Common Stock so
Transferred by the Class B Common Stock Conversion Rate.  The holder of any
shares of Class B Common Stock converted into Common Stock pursuant to this
Section 1(b)(ii) shall be entitled to payment on or with respect to such shares
of Class B Common Stock up to and including the Conversion Date.

                    (iii) MECHANICS OF CONVERSION.  The holder of any shares of
Class B Common Stock may exercise the conversion rights pursuant to
Section 10(b)(i) hereof as to any part thereof by delivering to the Corporation
during regular business hours, at the office of the Corporation or at such other
place as may be designated by the Corporation, the certificate or certificates
for the shares to be converted, duly endorsed or assigned in blank, accompanied
by a written notice stating that the holder elects to convert such shares and
stating the name or names (with address) in which the certificate or
certificates for the shares of Common Stock are to be issued.  Conversion shall
be deemed to have been effected (A) with respect to conversion under
Section 10(b)(i) hereof, on the date when the aforesaid delivery is made and (B)
with respect to conversion under Section 10(b)(ii) hereof, on the date of
occurrence of the Transfer, and such date, in either case, is referred to herein
as the "CLASS B COMMON


                                       18
<PAGE>


CONVERSION DATE".  As promptly as practicable after the Class B Common
Conversion Date, and in the case of Section 10(b)(ii) hereof, upon the delivery
to the Corporation during regular business hours, at the office of the
Corporation or at such other place as may be designated by the Corporation or at
such other place as may be designated by the Corporation, of the certificate or
certificates for the shares to be converted, duly endorsed or assigned in blank,
the Corporation shall issue and deliver to or upon the written order of such
holder, to the place designated by such holder, a certificate or certificates
for the number of full shares of Common Stock as provided in Section 10(b)(i)
and (ii) hereof, and a check or cash in payment of all declared but unpaid
dividends (to the extent permissible under law), if any, payable with respect to
the shares of Class B Common Stock so converted up to and including the Class B
Common Conversion Date.  The person in whose name the certificate or
certificates for Common Stock are to be issued shall be deemed to have become a
stockholder of record on the applicable Class B Common Conversion Date unless
the transfer books of the Corporation are closed on that date, in which event he
shall be deemed to have become a stockholder of record on the next succeeding
date on which the transfer books are open, but the Class B Common Stock
Conversion Rate shall be that in effect on the Class B Common Conversion Date.
Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Class B Common Stock surrendered for
conversion, the Corporation shall issue and deliver to or upon the written order
of the holder of the certificate as surrendered for conversion, at the expense
of the Corporation, a new certificate covering the number of shares of Class B
Common Stock representing the unconverted portion of the certificate so
surrendered, which new certificate shall entitle the holder thereof to dividends
on the shares of Class B Common Stock represented thereby to the same extent as
if the certificate theretofore covering such unconverted shares had not been
surrendered for conversion.

                    (iv) NO FRACTIONAL SHARES.  No fractional shares of Common
Stock or scrip shall be issued upon conversion of shares of Class B Common
stock.  The number of full shares of Common Stock issuable upon conversion of
Class B Common Stock surrendered by a holder thereof of Class B Common Stock
surrendered by a holder thereof for conversion shall be computed on the basis of
the aggregate number of shares of Class B Common Stock so surrendered, rounded
to the next higher whole number.

                    (v) ADJUSTMENTS TO CLASS B COMMON STOCK CONVERSION PRICE.
The Class B Common Stock Conversion Price shall be subject to adjustment from
time to time as follows:

                         (A) If, at any time after the Filing Date (as 
defined in Section 10(b)(vii)(B) hereof), the number of shares of Common 
Stock outstanding is increased by a stock dividend payable in shares of 
Common Stock or by a subdivision or split-up of shares of Common Stock, then, 
following the record date fixed for the determination of holders of Common 
Stock entitled to receive such stock dividend, subdivision or split-up, the 
Class B Common Stock Conversion Price shall be


                                       19
<PAGE>


appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of Class B Common Stock shall be increased in
proportion to such increase in outstanding shares.

                         (B) If, at any time after the Filing Date, the 
number of shares of Common Stock outstanding is decreased by a combination of 
the outstanding shares of Common Stock, then, following the record date for 
such combination, the Class B Common Stock Conversion Price shall be 
appropriately increased so that the number of shares of Common stock issuable 
on conversion of each share of Class B Common Stock shall be decreased in 
proportion to such decrease in outstanding shares.

                         (C) In case, at any time after the Filing Date, of 
any capital reorganization, or any reclassification of the capital stock of 
the Corporation (other than a change in par value or from par value to no par 
value or from on par value to par value or as a result of a stock dividend or 
subdivision, split-up or combination of shares) or the consolidation or 
merger of the Corporation with or into another person (other than a 
consolidation or merger in which the Corporation is the continuing 
corporation and which does not result in any change in the Common Stock) or 
of the sale or other disposition of all or substantially all the properties 
and assets of the Corporation as an entirety to any other person, such shares 
of Class B Common Stock shall after such reorganization, reclassification, 
consolidation, merger, sale or other disposition be convertible into the kind 
and number of shares of stock or other securities or property of the 
Corporation or of the Corporation resulting from such consolidation or 
surviving such merger or to which such properties and assets shall have been 
sold or otherwise disposed to which the holder of the number of shares of 
Common Stock deliverable (immediately prior to the time of such 
reorganization reclassification, consolidation, merger, sale or other 
disposition) upon conversion of such share would have been entitled upon such 
reorganization, reclassification, consolidation, merger, sale or other 
disposition.  The provisions of this Section 10(b)(v)(C) shall similarly 
apply to successive reorganization, reclassifications, consolidations, 
mergers, sales or other dispositions.

                         (D) All calculations under this paragraph (v) shall 
be made to the nearest one tenth (1/10) of a share.

                    (vi) RESERVATION OF SHARES.  The Corporation shall at all
times when the Class B Common Stock shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of effecting
the conversion of the Class B Common Stock, such number of its duly authorized
shares of Common Stock as shall from time to time be sufficient to effect the
conversion of all outstanding Class B Common Stock; and if at any time the
number of authorized but unissued shares' of Common Stock shall not be
sufficient to effect the conversion of all then outstanding shares of Class B
Common Stock, the Corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for the
purpose.


                                       20
<PAGE>


                    (vii) DEFINITIONS.

                         (A) "AFFILIATE" shall mean, as to any person or 
entity, a person or entity that, directly or indirectly through one or more 
intermediaries, controls, or is controlled by, or is under common control 
with, such person or entity.

                         (B) "FILING DATE" shall mean the date upon which the 
Corporation shall file with the Delaware Secretary of State this Restated 
Certificate of Incorporation.

                         (C) "TRANSFER" or "TRANSFERRED" shall mean to 
dispose, sell or in any other way directly or indirectly transfer, assign, 
distribute, encumber or otherwise dispose of, either voluntarily or 
involuntarily.

                         (D) "VOTING SHARES" shall mean any shares of the 
Corporation's capital stock entitled to vote in any election of directors of 
the Corporation.

          FIFTH:  The Corporation is to have perpetual existence.

          SIXTH:  Whenever a compromise is proposed between this Corporation 
and its creditors or any class of them and/or between this Corporation and 
its stockholders or any class of them, any court of equitable jurisdiction 
within the State of Delaware may, on the application in a summary way of this 
Corporation or of any creditor or stockholder thereof or on the application 
of any receiver or receivers appointed for this Corporation under the 
provisions of Section 291 of Title 8 of the Delaware Code or on the 
application of trustees in dissolution or of any receiver or receivers 
appointed for this Corporation under the provisions of Section 279 of Title 8 
of the Delaware Code order a meeting of the creditors, or class of creditors, 
and/or of the stockholders or class of stockholders of this Corporation, as 
the case may be, to be summoned in such manner as the said court directs.  If 
a majority in number representing three-fourths in value of the creditors or 
class of creditors, and/or of the stockholders or class of stockholders of 
this Corporation, as the case may be, agree to any compromise or arrangement 
and to any reorganization of this Corporation as a consequence of such 
compromise or arrangement, the same compromise or arrangement and the said 
reorganization shall, if sanctioned by the court to which the said 
application has been made, be binding on all the creditors or class or 
creditors, and/or on all the stockholders or class of stockholders, of this 
Corporation, as the case may be, and also on this Corporation.

          SEVENTH:  For the management of the business and for the conduct of 
the affairs of the Corporation, and in further definition, limitation, and 
regulation of the powers of the Corporation and of its directors and of its 
stockholders or any class thereof, as the case may be, it is further provided:

               (a)  The management of the business and the conduct of the 
affairs of the Corporation shall be vested in its Board of Directors.  The 
number of directors

                                       21
<PAGE>


which shall constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the Bylaws.  The phrase "whole Board" and the phrase "total
number of directors" shall be deemed to have the same meaning, to wit, the total
number of directors which the Corporation would have if there were no vacancies.
No election of directors need be by written ballot.

               (b)  After the original or other Bylaws of the Corporation 
have been adopted, amended, or repealed, as the case may be, in accordance 
with the provisions of Section 109 of the General Corporation Law of the 
State of Delaware, and, after the Corporation has received any payment for 
any of its stock, the power to adopt, amend, or repeal the Bylaws of the 
Corporation may be exercised by the Board of Directors of the Corporation; 
provided, however, that any provision for the classification of directors of 
the Corporation for staggered terms pursuant to the provisions of subsection 
(d) of Section 141 of the General Corporation Law of the State of Delaware 
shall be set forth in an initial Bylaw or in a Bylaw adopted by the 
stockholders entitled to vote of the Corporation unless provisions for such 
classification shall be set forth in this certificate of incorporation.

               (c)  Whenever the Corporation shall be authorized to issue 
only one class of stock, each outstanding share shall entitle the holder 
thereof to notice of, and the right to vote at, any meeting of stockholders.  
Whenever the Corporation shall be authorized to issue more than one class of 
stock, no outstanding share of any class of stock which is denied voting 
power under the provisions of the certificate of incorporation shall entitle 
the holder thereof to the right to vote at any meeting of stockholders except 
as the provisions of paragraph (2) of subsection (b) of Section 242 of the 
General Corporation Law of the State of Delaware shall otherwise require; 
provided, that no share of any such class which is otherwise denied voting 
power shall entitle the holder thereof to vote upon the increase or decrease 
in the number of authorized shares of said class.

          EIGHTH:  The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of Section 102 of the General Corporation Law of the State
of Delaware, as the same may be amended and supplemented.

          NINTH:  The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue


                                       22
<PAGE>


as to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
person.

          TENTH:  From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
certificate of incorporation are granted subject to the provisions of this
Article TENTH.

          RESOLVED FURTHER, that the foregoing Restated Certificate of 
Incorporation is hereby approved and adopted."

          IN WITNESS WHEREOF, BEA SYSTEMS, INC. has caused this Certificate 
to be signed by William T. Coleman III, its President and Chief Executive 
Officer, and attested to by Steve L. Brown, its Secretary, this ____ day of 
______________, 1997.

                                        BEA SYSTEMS, INC.



                                        -------------------------------
                                        William T. Coleman III
                                        President and Chief Executive Officer


ATTEST:


By:
   ----------------------
    Steve L. Brown
    Secretary


                                       23


<PAGE>

                                        BYLAWS

                                          OF

                                BEA ENTERPRISES, INC.

                                A DELAWARE CORPORATION

<PAGE>

                                  TABLE OF CONTENTS
                                     (CONTINUED)

                                                                            PAGE
- --------------------------------------------------------------------------------




                                     Section 1.

Offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
    Section 1.1. Registered Office . . . . . . . . . . . . . . . . . . . . . .1
    Section 1.2. Other Offices . . . . . . . . . . . . . . . . . . . . . . . .1

                                     Section 2.

Stockholders' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
    Section 2.1. Place of Meetings . . . . . . . . . . . . . . . . . . . . . .1
    Section 2.2. Annual Meetings . . . . . . . . . . . . . . . . . . . . . . .1
    Section 2.3. Special Meetings. . . . . . . . . . . . . . . . . . . . . . .1
    Section 2.4. Notice of Meetings. . . . . . . . . . . . . . . . . . . . . .1
    Section 2.5. Quorum. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
    Section 2.6. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . .3
    Section 2.7. List of Stockholders. . . . . . . . . . . . . . . . . . . . .3
    Section 2.8. Action Without Meeting. . . . . . . . . . . . . . . . . . . .3

                                     Section 3.

Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
    Section 3.1. Number and Term of Office . . . . . . . . . . . . . . . . . .4
    Section 3.2. Powers. . . . . . . . . . . . . . . . . . . . . . . . . . . .4
    Section 3.3. Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . .4
    Section 3.4. Resignations and Removals . . . . . . . . . . . . . . . . . .5
    Section 3.5. Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . .5
    Section 3.6. Quorum and Voting . . . . . . . . . . . . . . . . . . . . . .6
    Section 3.7. Action Without Meeting. . . . . . . . . . . . . . . . . . . .6
    Section 3.8. Fees and Compensation . . . . . . . . . . . . . . . . . . . .7
    Section 3.9. Committees. . . . . . . . . . . . . . . . . . . . . . . . . .7

                                     Section 4.

Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
    Section 4.1. Officers Designated . . . . . . . . . . . . . . . . . . . . .8
    Section 4.2. Tenure and Duties of Officers . . . . . . . . . . . . . . . .9

                                     Section 5.

Execution of Corporate Instruments, and Voting of Securities Owned
by the Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    Section 5.1. Execution of Corporate Instruments. . . . . . . . . . . . . 10
    Section 5.2. Voting of Securities Owned by Corporation . . . . . . . . . 11


                                          i

<PAGE>

                                  TABLE OF CONTENTS
                                     (CONTINUED)

                                                                            PAGE
- --------------------------------------------------------------------------------




                                     Section 6.

Shares of Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
    Section 6.1. Form and Execution of Certificates. . . . . . . . . . . . . 11
    Section 6.2. Lost Certificates . . . . . . . . . . . . . . . . . . . . . 11
    Section 6.3. Transfers . . . . . . . . . . . . . . . . . . . . . . . . . 12
    Section 6.4. Fixing Record Dates . . . . . . . . . . . . . . . . . . . . 12
    Section 6.5. Registered Stockholders . . . . . . . . . . . . . . . . . . 13

                                     Section 7.

Other Securities of the Corporation. . . . . . . . . . . . . . . . . . . . . 14

                                     Section 8.

Corporate Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

                                     Section 9.

Indemnification of Officers, Directors, Employees and Agents . . . . . . . . 14
    Section 9.1. Right to Indemnification. . . . . . . . . . . . . . . . . . 14
    Section 9.2. Authority to Advance Expenses . . . . . . . . . . . . . . . 15
    Section 9.3. Right of Claimant to Bring Suit . . . . . . . . . . . . . . 15
    Section 9.4. Provisions Nonexclusive . . . . . . . . . . . . . . . . . . 16
    Section 9.5. Authority to Insure . . . . . . . . . . . . . . . . . . . . 16
    Section 9.6. Survival of Rights. . . . . . . . . . . . . . . . . . . . . 16
    Section 9.7. Settlement of Claims. . . . . . . . . . . . . . . . . . . . 16
    Section 9.8. Effect of Amendment . . . . . . . . . . . . . . . . . . . . 16
    Section 9.9. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 16
    Section 9.10. No Duplication of Payments . . . . . . . . . . . . . . . . 17

                                     Section 10.

Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

                                     Section 11.

Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18


                                          ii

<PAGE>

                              AMENDED AND RESTATED BYLAWS
                                          OF
                                  BEA SYSTEMS, INC.
- --------------------------------------------------------------------------------

                                      SECTION 1.
                                       OFFICES

         SECTION 1.1.   REGISTERED OFFICE.  The registered office of the
corporation in the State of Delaware shall be 32 Loockerman Square, Suite L-100,
City of Dover, 19901, County of Kent.

         SECTION 1.2.        OTHER OFFICES.  The corporation shall also have
and maintain an office or principal place of business at 2465 East Bayshore
Road, Suite 301, Palo Alto, CA 94303, and may also have offices at such other
places, both within and without the State of Delaware as the Board of Directors
may from time to time determine or the business of the corporation may require.


                                      SECTION 2.
                                STOCKHOLDERS' MEETINGS

         SECTION 2.1.   PLACE OF MEETINGS.  Meetings of the stockholders of the
corporation shall be held at such place, either within or without the State of
Delaware, as may be designated from time to time by the Board of Directors, or,
if not so designated, then at the office of the corporation required to be
maintained pursuant to Section 1.2 of Article I hereof.

         SECTION 2.2.   ANNUAL MEETINGS.  The annual meetings of the
stockholders of the corporation, commencing with the year 1995, for the purpose
of election of directors and for such other business as may lawfully come before
it, shall be held on such date and at such time as may be designated from time
to time by the Board of Directors.

         SECTION 2.3.   SPECIAL MEETINGS.  Special Meetings of the stockholders
of the corporation may be called, for any purpose or purposes, by the Chairman
of the Board or the President or the Board of Directors at any time.

         SECTION 2.4.        NOTICE OF MEETINGS.

                                       1.   Except as otherwise provided by law
              or the Certificate of Incorporation, written notice of each
              meeting of stockholders, specifying the place, date and hour and
              purpose or purposes of the meeting, shall be given not less than
              ten nor more than sixty days before the date of the meeting to
              each stockholder entitled to vote thereat, directed to his
              address as it appears upon the books of the corporation; except
              that where the matter to be acted on is a merger or consolidation
              of the Corporation or a sale, lease or exchange of all or
              substantially all of its assets, such notice shall be given not
              less than twenty (20) nor more than sixty (60) days prior to such
              meeting.


                                          1

<PAGE>

                                       2.   If at any meeting action is
              proposed to be taken which, if taken, would entitle shareholders
              fulfilling the requirements of section 262(d) of the Delaware
              General Corporation Law to an appraisal of the fair value of
              their shares, the notice of such meeting shall contain a
              statement of that purpose and to that effect and shall be
              accompanied by a copy of that statutory section.

                                       3.   When a meeting is adjourned to
              another time or place, notice need not be given of the adjourned
              meeting if the time and place thereof are announced at the
              meeting at which the adjournment is taken unless the adjournment
              is for more than thirty days, or unless after the adjournment a
              new record date is fixed for the adjourned meeting, in which
              event a notice of the adjourned meeting shall be given to each
              stockholder of record entitled to vote at the meeting.

                                       4.   Notice of the time, place and
              purpose of any meeting of stockholders may be waived in writing,
              either before or after such meeting, and to the extent permitted
              by law, will be waived by any stockholder by his attendance
              thereat, in person or by proxy.  Any stockholder so waiving
              notice of such meeting shall be bound by the proceedings of any
              such meeting in all respects as if due notice thereof had been
              given.

                                       5.   Unless and until voted, every proxy
              shall be revocable at the pleasure of the person who executed it
              or of his legal representatives or assigns, except in those cases
              where an irrevocable proxy permitted by statute has been given.


         SECTION 2.5.   QUORUM.

                                       1.   At all meetings of stockholders,
              except where otherwise provided by law, the Certificate of
              Incorporation, or these Bylaws, the presence, in person or by
              proxy duly authorized, of the holders of a majority of the
              outstanding shares of stock entitled to vote shall constitute a
              quorum for the transaction of business. Shares, the voting of
              which at said meeting have been enjoined, or which for any reason
              cannot be lawfully voted at such meeting, shall not be counted to
              determine a quorum at said meeting.  In the absence of a quorum,
              any meeting of stockholders may be adjourned, from time to time,
              by vote of the holders of a majority of the shares represented
              thereat, but no other business shall be transacted at such
              meeting.  At such adjourned meeting at which a quorum is present
              or represented any business may be transacted which might have
              been transacted at the original meeting.  The stockholders
              present at a duly called or convened meeting, at which a quorum
              is present, may continue to transact business until adjournment,
              notwithstanding the withdrawal of enough stockholders to leave
              less than a quorum.


                                          2

<PAGE>

                                       2.   Except as otherwise provided by
              law, the Certificate of Incorporation or these Bylaws, all action
              taken by the holders of a majority of the voting power
              represented at any meeting at which a quorum is present shall be
              valid and binding upon the corporation.


         SECTION 2.6.   VOTING RIGHTS.

                                       1.   Except as otherwise provided by
              law, only persons in whose names shares entitled to vote stand on
              the stock records of the corporation on the record date for
              determining the stockholders entitled to vote at said meeting
              shall be entitled to vote at such meeting.  Shares standing in
              the names of two or more persons shall be voted or represented in
              accordance with the determination of the majority of such
              persons, or, if only one of such persons is present in person or
              represented by proxy, such person shall have the right to vote
              such shares and such shares shall be deemed to be represented for
              the purpose of determining a quorum.

                                       2.   Every person entitled to vote or
              execute consents shall have the right to do so either in person
              or by an agent or agents authorized by a written proxy executed
              by such person or his duly authorized agent, which proxy shall be
              filed with the Secretary of the corporation at or before the
              meeting at which it is to be used.  Said proxy so appointed need
              not be a stockholder.  No proxy shall be voted on after three
              years from its date unless the proxy provides for a longer
              period.


         SECTION 2.7.   LIST OF STOCKHOLDERS.  The officer who has charge of
the stock ledger of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at said meeting, arranged in alphabetical order, showing the
address of and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held and which place shall be specified in the notice of the
meeting, or, if not specified, at the place where said meeting is to be held,
and the list shall be produced and kept at the time and place of meeting during
the whole time thereof, and may be inspected by any stockholder who is present.


         SECTION 2.8.   ACTION WITHOUT MEETING.  Unless otherwise provided in
the Certificate of Incorporation, any action required by statute to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, are signed by


                                          3

<PAGE>

the holders of outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted.  To be
effective, a written consent must be delivered to the corporation by delivery to
its registered office in Delaware, its principal place of business, or an
officer or agent of the corporation having custody of the book in which
proceedings of meetings of stockholders are recorded.  Delivery made to a
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested.  Every written consent shall bear the date of
signature of each stockholder who signs the consent and no written consent shall
be effective to take the corporate action referred to therein unless, within
sixty days of the earliest dated consent delivered in the manner required by
this Section to the corporation, written consents signed by a sufficient number
of holders to take action are delivered to the corporation in accordance with
this Section.  Prompt notice of the taking of the corporate action without a
meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.



                                   SECTION 3.
                                   DIRECTORS


         SECTION 3.1.   NUMBER AND TERM OF OFFICE.  The number of directors
which shall constitute the whole of the Board of Directors shall be not less
that four (4) nor more than seven (7).  With the exception of the first Board of
Directors, which shall be elected by the incorporators, and except as provided
in Section 3.3 of this Article III, the directors shall be elected by a
plurality vote of the shares represented in person or by proxy, at the
stockholders annual meeting in each year and entitled to vote on the election of
directors.  Elected directors shall hold office until the next annual meeting
and until their successors shall be duly elected and qualified.  Directors need
not be stockholders.  If, for any cause, the Board of Directors shall not have
been elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.


         SECTION 3.2.   POWERS.  The powers of the corporation shall be
exercised, its business conducted and its property controlled by or under the
direction of the Board of Directors.


         SECTION 3.3.   VACANCIES.  Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, although less than a quorum, or
by a sole remaining director, and each director so elected shall hold office for
the unexpired portion of the term of the director whose place shall be vacant,
and until his successor shall have been duly elected and qualified.  A vacancy
in the Board of Directors shall be deemed to exist under this section in the
case of the death, removal or resignation of any director, or if the
stockholders fail at any meeting of


                                          4

<PAGE>

stockholders at which directors are to be elected (including any meeting
referred to in Section 3.4 below) to elect the number of directors then
constituting the whole Board.


         SECTION 3.4.   RESIGNATIONS AND REMOVALS.

                                       1.   Any director may resign at any time
              by delivering his written resignation to the Secretary, such
              resignation to specify whether it will be effective at a
              particular time, upon receipt by the Secretary or at the pleasure
              of the Board of Directors.  If no such specification is made it
              shall be deemed effective at the pleasure of the Board of
              Directors.  When one or more directors shall resign from the
              Board, effective at a future date, a majority of the directors
              then in office, including those who have so resigned, shall have
              power to fill such vacancy or vacancies, the vote thereon to take
              effect when such resignation or resignations shall become
              effective, and each director so chosen shall hold office for the
              unexpired portion of the term of the director whose place shall
              be vacated and until his successor shall have been duly elected
              and qualified.

                                       2.   At a special meeting of
              stockholders called for the purpose in the manner hereinabove
              provided, the Board of Directors, or any individual director, may
              be removed from office, with or without cause, and a new director
              or directors elected by a vote of stockholders holding a majority
              of the outstanding shares entitled to vote at an election of
              directors.


         SECTION 3.5.   MEETINGS.

                                       1.   The annual meeting of the Board of
              Directors shall be held immediately after the annual
              stockholders' meeting and at the place where such meeting is held
              or at the place announced by the Chairman at such meeting.  No
              notice of an annual meeting of the Board of Directors shall be
              necessary and such meeting shall be held for the purpose of
              electing officers and transacting such other business as may
              lawfully come before it.

                                       2.   Except as hereinafter otherwise
              provided, regular meetings of the Board of Directors shall be
              held in the office of the corporation required to be maintained
              pursuant to Section 1.2 of Article I hereof.  Regular meetings of
              the Board of Directors may also be held at any place within or
              without the State of Delaware which has been designated by
              resolutions of the Board of Directors or the written consent of
              all directors.

                                       3.   Special meetings of the Board of
              Directors may be held at any time and place within or without the
              State of


                                          5

<PAGE>

              Delaware whenever called by the Chairman of the Board or, if
              there is no Chairman of the Board, by the President, or by any of
              the directors.

                                       4.   Written notice of the time and
              place of all regular and special meetings of the Board of
              Directors shall be delivered personally to each director or sent
              by telegram or facsimile at least 48 hours before the start of
              the meeting, or sent by first class mail at lease 120 hours
              before the start of the meeting.  Notice of any meeting may be
              waived in writing at any time before or after the meeting and
              will be waived by any director by attendance thereat.


SECTION 3.6.  QUORUM AND VOTING.

                                       1.   A quorum of the Board of Directors
              shall consist of a majority of the exact number of directors
              fixed from time to time in accordance with Section 3.1 of
              Article III of these Bylaws, but not less than one; provided,
              however, at any meeting whether a quorum be present or otherwise,
              a majority of the directors present may adjourn from time to time
              until the time fixed for the next regular meeting of the Board of
              Directors, without notice other than by announcement at the
              meeting.

                                       2.   At each meeting of the Board at
              which a quorum is present all questions and business shall be
              determined by a vote of a majority of the directors present,
              unless a different vote be required by law, the Certificate of
              Incorporation, or these Bylaws.

                                       3.   Any member of the Board of
              Directors, or of any committee thereof, may participate in a
              meeting by means of conference telephone or similar communication
              equipment by means of which all persons participating in the
              meeting can hear each other, and participation in a meeting by
              such means shall constitute presence in person at such meeting.

                                       4.   The transactions of any meeting of
              the Board of Directors, or any committee thereof, however called
              or noticed, or wherever held, shall be as valid as though had at
              a meeting duly held after regular call and notice, if a quorum be
              present and if, either before or after the meeting, each of the
              directors not present shall sign a written waiver of notice, or a
              consent to holding such meeting, or an approval of the minutes
              thereof.  All such waivers, consents or approvals shall be filed
              with the corporate records or made a part of the minutes of the
              meeting.


         SECTION 3.7.   ACTION WITHOUT MEETING.  Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all members of the Board or
of such committee, as the case may be, consent thereto in writing,


                                          6

<PAGE>

and such writing or writings are filed with the minutes of proceedings of the
Board or committee.


         SECTION 3.8.   FEES AND COMPENSATION.  Directors and members of
committees shall not receive any salary, fees or other compensation for their
services as directors.


         SECTION 3.9.   COMMITTEES.

                                       1.   EXECUTIVE COMMITTEE.  The Board of
              Directors may, by resolution passed by a majority of the whole
              Board, appoint an Executive Committee of not less than one
              member, each of whom shall be a director.  The Executive
              Committee, to the extent permitted by law, shall have and may
              exercise when the Board of Directors is not in session all powers
              of the Board in the management of the business and affairs of the
              corporation, including, without limitation, the power and
              authority to declare a dividend or to authorize the issuance of
              stock, except such committee shall not have the power or
              authority to amend the Certificate of Incorporation, to adopt an
              agreement or merger or consolidation, to recommend to the
              stockholders the sale, lease or exchange of all or substantially
              all of the corporation's property and assets, to recommend to the
              stockholders of the Corporation a dissolution of the Corporation
              or a revocation of a dissolution, or to amend these Bylaws.

                                       2.   OTHER COMMITTEES.  The Board of
              Directors may, by resolution passed by a majority of the whole
              Board, from time to time appoint such other committees as may be
              permitted by law.  Such other committees appointed by the Board
              of Directors shall have such powers and perform such duties as
              may be prescribed by the resolution or resolutions creating such
              committee, but in no event shall any such committee have the
              powers denied to the Executive Committee in these Bylaws.

                                       3.   TERM.  The members of all
              committees of the Board of Directors shall serve a term
              coexistent with that of the Board of Directors which shall have
              appointed such committee.  The Board, subject to the provisions
              of subsections (a) or (b) of this Section 3.9, may at any time
              increase or decrease the number of members of a committee or
              terminate the existence of a committee; provided, that no
              committee shall consist of less than one member.  The membership
              of a committee member shall terminate on the date of his death or
              voluntary resignation, but the Board may at any time for any
              reason remove any individual committee member and the Board may
              fill any committee vacancy created by death, resignation, removal
              or increase in the number of members of the committee.  The Board
              of Directors may designate one or more directors as alternate
              members of any committee, who may replace any absent or
              disqualified member at any meeting of the committee, and, in
              addition, in the absence or disqualification of any


                                          7

<PAGE>

              member of a committee, the member or members thereof present at
              any meeting and not disqualified from voting, whether or not he
              or they constitute a quorum, may unanimously appoint another
              member of the Board of Directors to act at the meeting in the
              place of any such absent or disqualified member.

                                       4.   MEETINGS.  Unless the Board of
              Directors shall otherwise provide, regular meetings of the
              Executive Committee or any other committee appointed pursuant to
              this Section 3.9 shall be held at such times and places as are
              determined by the Board of Directors, or by any such committee,
              and when notice thereof has been given to each member of such
              committee, no further notice of such regular meetings need be
              given thereafter; special meetings of any such committee may be
              held at the principal office of the corporation required to be
              maintained pursuant to Section 1.2 of Article I hereof; or at any
              place which has been designated from time to time by resolution
              of such committee or by written consent of all members thereof,
              and may be called by any director who is a member of such
              committee, upon written notice to the members of such committee
              of the time and place of such special meeting given in the manner
              provided for the giving of written notice to members of the Board
              of Directors of the time and place of special meetings of the
              Board of Directors.  Notice of any special meeting of any
              committee may be waived in writing at any time after the meeting
              and will be waived by any director by attendance thereat.  A
              majority of the authorized number of members of any such
              committee shall constitute a quorum for the transaction of
              business, and the act of a majority of those present at any
              meeting at which a quorum is present shall be the act of such
              committee.


                                      SECTION 4.
                                       OFFICERS


         SECTION 4.1.   OFFICERS DESIGNATED.  The officers of the corporation
shall be a Chairman of the Board of Directors and a President, and one or more
Vice-Presidents, a Secretary, and a Treasurer.  The order of the seniority of
the Vice Presidents shall be in the order of their nomination, unless otherwise
determined by the Board of Directors.  The Board of Directors or the Chairman of
the Board or the President may also appoint one or more assistant secretaries,
assistant treasurers, and such other officers and agents with such powers and
duties as it or he shall deem necessary.  The Board of Directors may assign such
additional titles to one or more of the officers as they shall deem appropriate.
Any one person may hold any number of offices of the corporation at any one time
unless specifically prohibited therefrom by law.  The salaries and other
compensation of the officers of the corporation shall be fixed by or in the
manner designated by the Board of Directors.


                                          8

<PAGE>

         SECTION 4.2.   TENURE AND DUTIES OF OFFICERS.

                                       1.   GENERAL.  All officers shall hold
              office at the pleasure of the Board of Directors and until their
              successors shall have been duly elected and qualified, unless
              sooner removed.  Any officer elected or appointed by the Board of
              Directors may be removed at any time by the Board of Directors.
              If the office of any officer becomes vacant for any reason, the
              vacancy may be filled by the Board of Directors.  Nothing in
              these Bylaws shall be construed as creating any kind of
              contractual right to employment with the corporation.

                                       2.   DUTIES OF THE CHAIRMAN OF THE BOARD
              OF DIRECTORS.  The Chairman of the Board of Directors (if there
              be such an officer appointed) shall be the chief executive
              officer of the corporation and, when present, shall preside at
              all meetings of the shareholders and the Board of Directors.  The
              Chairman of the Board of Directors shall perform such other
              duties and have such other powers as the Board of Directors shall
              designate from time to time.

                                       3.   DUTIES OF PRESIDENT.  The President
              shall be the chief executive officer of the corporation in the
              absence of the Chairman of the Board and shall preside at all
              meetings of the shareholders and at all meetings of the Board of
              Directors, unless the Chairman of the Board of Directors has been
              appointed and is present.  The President shall perform such other
              duties and have such other powers as the Board of Directors shall
              designate from time to time.

                                       4.   DUTIES OF VICE-PRESIDENTS.  The
              Vice-Presidents, in the order of their seniority, may assume and
              perform the duties of the President in the absence or disability
              of the President or whenever the office of the President is
              vacant.  The Vice-President shall perform such other duties and
              have such other powers as the Board of Directors or the President
              shall designate from time to time.

                                       5.   DUTIES OF SECRETARY.  The Secretary
              shall attend all meetings of the shareholders and of the Board of
              Directors and any committee thereof, and shall record all acts
              and proceedings thereof in the minute book of the corporation.
              The Secretary shall give notice, in conformity with these Bylaws,
              of all meetings of the shareholders, and of all meetings of the
              Board of Directors and any Committee thereof requiring notice.
              The Secretary shall perform such other duties and have such other
              powers as the Board of Directors shall designate from time to
              time.  The President may direct any Assistant Secretary to assume
              and perform the duties of the Secretary in the absence or
              disability of the Secretary, and each Assistant Secretary shall
              perform such other duties and have such other powers as the Board
              of Directors or the President shall designate from time to time.



                                          9

<PAGE>

                                       6.   DUTIES OF TREASURER.  The Treasurer
              shall keep or cause to be kept the books of account of the
              corporation in a thorough and proper manner, and shall render
              statements of the financial affairs of the corporation in such
              form and as often as required by the Board of Directors or the
              President.  The Treasurer, subject to the order of the Board of
              Directors, shall have the custody of all funds and securities of
              the corporation.  The Treasurer shall perform all other duties
              commonly incident to his office and shall perform such other
              duties and have such other powers as the Board of Directors or
              the President shall designate from time to time.  The President
              may direct any Assistant Treasurer to assume and perform the
              duties of the Treasurer in the absence or disability of the
              Treasurer, and each Assistant Treasurer shall perform such other
              duties and have such other powers as the Board of Directors or
              the President shall designate from time to time.


                                      SECTION 5.
                    EXECUTION OF CORPORATE INSTRUMENTS, AND VOTING
                        OF SECURITIES OWNED BY THE CORPORATION


         SECTION 5.1.   EXECUTION OF CORPORATE INSTRUMENTS.

                                       1.   The Board of Directors may, in its
              discretion, determine the method and designate the signatory
              officer or officers, or other person or persons, to execute any
              corporate instrument or document, or to sign the corporate name
              without limitation, except where otherwise provided by law, and
              such execution or signature shall be binding upon the
              corporation.

                                       2.   Unless otherwise specifically
              determined by the Board of Directors or otherwise required by
              law, formal contracts of the corporation, promissory notes, deeds
              of trust, mortgages and other evidences of indebtedness of the
              corporation, and other corporate instruments or documents
              requiring the corporate seal, and certificates of shares of stock
              owned by the corporation, shall be executed, signed or endorsed
              by the Chairman of the Board (if there be such an officer
              appointed) or by the President; such documents may also be
              executed by any Vice-President AND by the Secretary or Treasurer
              or any Assistant Secretary or Assistant Treasurer.  All other
              instruments and documents requiring the corporate signature, but
              not requiring the corporate seal, may be executed as aforesaid or
              in such other manner as may be directed by the Board of
              Directors.

                                       3.   All checks and drafts drawn on
              banks or other depositaries on funds to the credit of the
              corporation, or in


                                          10

<PAGE>


              special accounts of the corporation, shall be signed by such
              person or persons as the Board of Directors shall authorize so to
              do.


         SECTION 5.2.   VOTING OF SECURITIES OWNED BY CORPORATION.  All stock
and other securities of other corporations owned or held by the corporation for
itself, or for other parties in any capacity, shall be voted, and all proxies
with respect thereto shall be executed, by the person authorized so to do by
resolution of the Board of Directors or, in the absence of such authorization,
by the Chairman of the Board (if there be such an officer appointed), or by the
President, or by any Vice-President.



                                      SECTION 6.
                                   SHARES OF STOCK



         SECTION 6.1.   FORM AND EXECUTION OF CERTIFICATES.  Certificates for
the shares of stock of the corporation shall be in such form as is consistent
with the Certificate of Incorporation and applicable law.  Every holder of stock
in the corporation shall be entitled to have a certificate signed by, or in the
name of the corporation by, the Chairman of the Board (if there be such an
officer appointed), or by the President or any Vice-President and by the
Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary,
certifying the number of shares owned by him in the corporation.  Any or all of
the signatures on the certificate may be a facsimile.  In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.  If the corporation shall be authorized to issue more than one class
of stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the Delaware General Corporation Law, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.


         SECTION 6.2.   LOST CERTIFICATES.  The Board of Directors may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost or destroyed.  When authorizing such issue
of a new certificate or certificates, the Board of Directors may, in its
discretion and as


                                          11


<PAGE>

a condition precedent to the issuance thereof, require the owner of such lost or
destroyed certificate or certificates, or his legal representative, to indemnify
the corporation in such manner as it shall require and/or to give the
corporation a surety bond in such form and amount as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.


         SECTION 6.3.   TRANSFERS.  Transfers of record of shares of stock of
the corporation shall be made only upon its books by the holders thereof, in
person or by attorney duly authorized, and upon the surrender of a certificate
or certificates for a like number of shares, properly endorsed.


         SECTION 6.4.   FIXING RECORD DATES.

                                       1.   In order that the corporation may
              determine the stockholders entitled to notice of or to vote at
              any meeting of stockholders or any adjournment thereof, the Board
              of Directors may fix a record date, which record date shall not
              precede the date upon which the resolution fixing the record date
              is adopted by the Board of Directors, and which record date shall
              not be more than sixty nor less than ten days before the date of
              such meeting.  If no record date is fixed by the Board of
              Directors, the record date for determining stockholders entitled
              to notice of or to vote at a meeting of stockholders shall be at
              the close of business on the day next preceding the day on which
              notice is given, or, if notice is waived, at the close of
              business on the day next preceding the date on which the meeting
              is held.  A determination of stockholders of record entitled
              notice of or to vote at a meeting of stockholders shall apply to
              any adjournment of the meeting; provided, however, that the Board
              of Directors may fix a new record date for the adjourned meeting.

                                       2.   In order that the corporation may
              determine the stockholders entitled to consent to corporate
              action in writing without a meeting, the Board of Directors may
              fix a record date, which record date shall not precede the date
              upon which the resolution fixing the record date is adopted by
              the Board of Directors, and which date shall not be more than ten
              days after the date upon which the resolution fixing the record
              date is adopted by the Board of Directors.  If no record date has
              been fixed by the Board of Directors, the record date for
              determining stockholders entitled to consent to corporate action
              in writing without a meeting, when no prior action by the Board
              of Directors is required by the Delaware General Corporation Law,
              shall be the first date on which a signed written consent setting
              forth the action taken or proposed to be taken is delivered to
              the corporation by delivery to its registered office in Delaware,
              its principal place of business, or an officer or agent of the
              corporation having custody of the book in which proceedings of
              meetings of stockholders are recorded.  Delivery made to a
              corporation's registered office shall be by hand or by certified
              or registered


                                          12

<PAGE>

              mail, return receipt requested.  If no record date has been fixed
              by the Board of Directors and prior action by the Board of
              Directors is required by law, the record date for determining
              stockholders entitled to consent to corporate action in writing
              without a meeting shall be at the close of business on the day on
              which the Board of Directors adopts the resolution taking such
              prior action.

                                       3.   In order that the corporation may
              determine the stockholders entitled to receive payment of any
              dividend or other distribution or allotment of any rights or the
              stockholders entitled to exercise any rights in respect of any
              change, conversion or exchange of stock, or for the purpose of
              any other lawful action, the Board of Directors may fix a record
              date, which record date shall not precede the date upon which the
              resolution fixing the record date is adopted, and which record
              date shall be not more than sixty days prior to such action.  If
              no record date is fixed, the record date for determining
              stockholders for any such purpose shall be at the close of
              business on the day on which the Board of Directors adopts the
              resolution relating thereto.


         SECTION 6.5.   REGISTERED STOCKHOLDERS.  The corporation shall be
entitled to recognize the exclusive right of a person registered on its books as
the owner of shares to receive dividends, and to vote as such owner, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.


                                          13

<PAGE>

                                      SECTION 7.
                         OTHER SECURITIES OF THE CORPORATION


    All bonds, debentures and other corporate securities of the corporation,
other than stock certificates, may be signed by the Chairman of the Board (if
there be such an officer appointed), or the President or any Vice-President or
such other person as may be authorized by the Board of Directors and the
corporate seal impressed thereon or a facsimile of such seal imprinted thereon
and attested by the signature of the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signature of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons.  Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation, or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person.  In case any officer who shall have signed
or attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or before the bond, debenture or other corporate
security so signed or attested shall have been delivered, such bond, debenture
or other corporate security nevertheless may be adopted by the corporation and
issued and delivered as though the person who signed the same or whose facsimile
signature shall have been used thereon had not ceased to be such officer of the
corporation.


                                      SECTION 8.
                                    CORPORATE SEAL


    The corporate seal shall consist of a die bearing the name of the
corporation and the state and date of its incorporation.  Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.


                                      SECTION 9.
             INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS


         SECTION 9.1.   RIGHT TO INDEMNIFICATION.  Each person who was or is a
party or is threatened to be made a party to or is involved (as a party,
witness, or otherwise), in any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative
(hereinafter a "Proceeding"), by reason of the fact that he, or a person of whom
he is the legal representative, is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of the corporation
as a director, officer, employee, or agent of another corporation or of a
partnership, joint venture, trust, or other


                                          14

<PAGE>

enterprise, including service with respect to employee benefit plans, whether
the basis of the Proceeding is alleged action in an official capacity as a
director, officer, employee, or agent or in any other capacity while serving as
a director, officer, employee, or agent (hereafter an "Agent"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended or interpreted (but, in the case of any such amendment or
interpretation, only to the extent that such amendment or interpretation permits
the corporation to provide broader indemnification rights than were permitted
prior thereto) against all expenses, liability, and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to
be paid in settlement, and any interest, assessments, or other charges imposed
thereon, and any federal, state, local, or foreign taxes imposed on any Agent as
a result of the actual or deemed receipt of any payments under this Article)
reasonably incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing in, any Proceeding (hereinafter "Expenses");
PROVIDED, HOWEVER, that except as to actions to enforce indemnification rights
pursuant to Section 9.3 of this Article, the corporation shall indemnify any
Agent seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation.  The right to indemnification
conferred in this Article shall be a contract right.


         SECTION 9.2.   AUTHORITY TO ADVANCE EXPENSES.  Expenses incurred by an
officer or director (acting in his capacity as such) in defending a Proceeding
shall be paid by the corporation in advance of the final disposition of such
Proceeding, PROVIDED, HOWEVER, that if required by the Delaware General
Corporation Law, as amended, such Expenses shall be advanced only upon delivery
to the corporation of an undertaking by or on behalf of such director or officer
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this Article or
otherwise.  Expenses incurred by other Agents of the corporation (or by the
directors or officers not acting in their capacity as such, including service
with respect to employee benefit plans) may be advanced upon such terms and
conditions as the Board of Directors deems appropriate.  Any obligation to
reimburse the corporation for Expense advances shall be unsecured and no
interest shall be charged thereon.


         SECTION 9.3.   RIGHT OF CLAIMANT TO BRING SUIT.  If a claim under
Section 9.1 or 9.2 of this Article is not paid in full by the corporation within
90 days after a written claim has been received by the corporation, the claimant
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim and, if successful in whole or in part, the claimant
shall be entitled to be paid also the expense (including attorneys' fees) of
prosecuting such claim.  It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending a
Proceeding in advance of its final disposition where the required undertaking
has been tendered to the corporation) that the claimant has not met the
standards of conduct that make it permissible under the Delaware General
Corporation Law for the corporation to indemnify the claimant for the amount
claimed.  The burden of proving such a defense shall be on the corporation.
Neither the failure of the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to


                                          15

<PAGE>

the commencement of such action that indemnification of the claimant is proper
under the circumstances because he has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual determination
by the corporation (including its Board of Directors, independent legal counsel,
or its stockholders) that the claimant had not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.


         SECTION 9.4.   PROVISIONS NONEXCLUSIVE.  The rights conferred on any
person by this Article shall not be exclusive of any other rights that such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, agreement, vote of stockholders or disinterested
directors, or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office.  To the extent that any
provision of the Certificate, agreement, or vote of the stockholders or
disinterested directors is inconsistent with these bylaws, the provision,
agreement, or vote shall take precedence.


         SECTION 9.5.   AUTHORITY TO INSURE.  The corporation may purchase and
maintain insurance to protect itself and any Agent against any Expense, whether
or not the corporation would have the power to indemnify the Agent against such
Expense under applicable law or the provisions of this Article.


         SECTION 9.6.   SURVIVAL OF RIGHTS.  The rights provided by this
Article shall continue as to a person who has ceased to be an Agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.


         SECTION 9.7.   SETTLEMENT OF CLAIMS.  The corporation shall not be
liable to indemnify any Agent under this Article (a) for any amounts paid in
settlement of any action or claim effected without the corporation's written
consent, which consent shall not be unreasonably withheld; or (b) for any
judicial award if the corporation was not given a reasonable and timely
opportunity, at its expense, to participate in the defense of such action.


         SECTION 9.8.   EFFECT OF AMENDMENT.  Any amendment, repeal, or
modification of this Article shall not adversely affect any right or protection
of any Agent existing at the time of such amendment, repeal, or modification.


         SECTION 9.9.   SUBROGATION.  In the event of payment under this
Article, the corporation shall be subrogated to the extent of such payment to
all of the rights of recovery of the Agent, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable the corporation
effectively to bring suit to enforce such rights.


                                          16

<PAGE>

         SECTION 9.10.  NO DUPLICATION OF PAYMENTS.  The corporation shall not
be liable under this Article to make any payment in connection with any claim
made against the Agent to the extent the Agent has otherwise actually received
payment (under any insurance policy, agreement, vote, or otherwise) of the
amounts otherwise indemnifiable hereunder.



                                     SECTION 10.
                                       NOTICES



    Whenever, under any provisions of these Bylaws, notice is required to be 
given to any stockholder, the same shall be given in writing, timely and duly 
deposited in the United States Mail, postage prepaid, and addressed to his 
last known post office address as shown by the stock record of the 
corporation or its transfer agent.  Any notice required to be given to any 
director may be given by the method hereinabove stated, or by telegram or 
other means of electronic transmission, except that such notice other than 
one which is delivered personally, shall be sent to such address or (in the 
case of facsimile telecommunication) facsimile telephone number as such 
director shall have filed in writing with the Secretary of the corporation, 
or, in the absence of such filing, to the last known post office address of 
such director.  If no address of a stockholder or director be known, such 
notice may be sent to the office of the corporation required to be maintained 
pursuant to Section 1.2 of Article I hereof.  An affidavit of mailing, 
executed by a duly authorized and competent employee of the corporation or 
its transfer agent appointed with respect to the class of stock affected, 
specifying the name and address or the names and addresses of the stockholder 
or stockholders, director or directors, to whom any such notice or notices 
was or were given, and the time and method of giving the same, shall be 
conclusive evidence of the statements therein contained.  All notices given 
by mail, as above provided, shall be deemed to have been given as at the time 
of mailing and all notices given by telegram or other means of electronic 
transmission shall be deemed to have been given as at the sending time 
recorded by the telegraph company or other electronic transmission equipment 
operator transmitting the same.  It shall not be necessary that the same 
method of giving be employed in respect of all directors, but one permissible 
method may be employed in respect of any one or more, and any other 
permissible method or methods may be employed in respect of any other or 
others.  The period or limitation of time within which any stockholder may 
exercise any option or right, or enjoy any privilege or benefit, or be 
required to act, or within which any director may exercise any power or 
right, or enjoy any privilege, pursuant to any notice sent him in the manner 
above provided, shall not be affected or extended in any manner by the 
failure of such a stockholder or such director to receive such notice.  
Whenever any notice is required to be given under the provisions of the 
statutes or of the Certificate of Incorporation, or of these Bylaws, a waiver 
thereof in writing signed by the person or persons entitled to said notice, 
whether before or after the time stated therein, shall be deemed equivalent 
thereto.  Whenever notice is required to be given, under any provision of law 
or of the Certificate of Incorporation or Bylaws of the corporation, to any 
person with whom communication is unlawful, the giving of such notice to such 
person shall not be required and there shall be no duty to apply to any 
governmental authority or agency for a license or permit to give such notice 
to such person.  Any action or meeting which shall be taken or held without 
notice to any such person with whom communication is unlawful shall have the 
same force and effect as if such notice had been duly given. In the event 
that the action taken by the corporation is such as to require the filing of 
a certificate under any provision of the Delaware General Corporation Law, 
the certificate shall

                                          17

<PAGE>

state, if such is the fact and if notice is required, that notice was given to
all persons entitled to receive notice except such persons with whom
communication is unlawful.



                                      SECTION 11.
                                      AMENDMENTS



    These Bylaws may be repealed, altered or amended or new Bylaws adopted by
written consent of stockholders in the manner authorized by Section 2.11 of
Article II, or at any meeting of the stockholders, either annual or special, by
the affirmative vote of a majority of the stock entitled to vote at such
meeting.  The Board of Directors shall also have the authority to repeal, alter
or amend these Bylaws or adopt new Bylaws (including, without limitation, the
amendment of any Bylaws setting forth the number of directors who shall
constitute the whole Board of Directors) by unanimous written consent or at any
annual, regular, or special meeting by the affirmative vote of a majority of the
whole number of directors, subject to the power of the stockholders to change or
repeal such Bylaws and provided that the Board of Directors shall not make or
alter any Bylaws fixing the qualifications, classifications, or term of office
of directors.


                                          18

<PAGE>

                               CERTIFICATE OF SECRETARY



    The undersigned, Secretary of BEA Enterprises, Inc., a Delaware
corporation, hereby certifies that the foregoing is a full, true and correct
copy of the Bylaws of said Corporation, with all amendments to date of this
Certificate.

    WITNESS the signature of the undersigned and the seal of the Corporation
this ___ day of March 1997.




                                  ____________________________________
                                       SECRETARY


                                          19


<PAGE>

                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                                BEA SYSTEMS, INC.


                        Pursuant to Sections 242 and 245
                 of the General Corporation Law of the State of
                                    Delaware

                 _______________________________________________

     BEA SYSTEMS, INC. (the "Corporation"), a Corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"General Corporation Law") having filed its original Certificate of
Incorporation under the name BEA Enterprises, Inc. on January 20, 1995, does
hereby certify as follows:

     That the following resolutions amending and restating the Corporation's
Certificate of Incorporation were duly adopted by the Corporation's Board of
Directors and by the holders of a majority of the Corporation's outstanding
stock entitled to vote thereon and if required, a majority of each class
entitled to vote thereon as a class, in accordance with the provisions of
Sections 242 and 245 of the General Corporation Law by written consent of the
Board of Directors and the stockholders given in accordance with Sections 141
and 228, respectively of the General Corporation Law:

          NOW, THEREFORE, BE IT RESOLVED, that the Certificate of
     Incorporation of the Corporation be amended and restated in its
     entirety as follows:

          FIRST:  The name of the corporation (hereinafter called the
     "Corporation") is BEA Systems, Inc.

          SECOND:  The address, including street, number, city and county,
     of the registered office of the Corporation in the State of Delaware
     is 32 Loockerman Square, Suite L-100, City of Dover, 19901, County of
     Kent; and the name of the registered agent of the Corporation in the
     State of Delaware at such address is The Prentice-Hall Corporation
     System, Inc.

          THIRD:  The nature of the business and the purposes to be
     conducted and promoted by the Corporation shall be to conduct any
     lawful business, to promote any lawful purpose, and to engage in any
     lawful act or activity for which Corporations may be organized under
     the General Corporation Law of the State of Delaware.

          FOURTH:  This Corporation is authorized to issue two classes of
     shares, designated "Preferred Stock" and "Common Stock."  The total


                                        1
<PAGE>

     number of shares which the Corporation is authorized to issue is one
     hundred twenty million (120,000,000) shares.  One hundred fifteen million
     (115,000,000) shares shall be Common Stock, $0.001 par value, (the 
     "Common Stock"), of which thirty-five million (35,000,000) are hereby 
     designated Class B Common Stock.  Five million (5,000,000) shares shall 
     be Preferred Stock, $0.001 par value (the "Preferred Stock").  The 
     undesignated shares of Preferred Stock shall be issued from time to 
     time in one or more series.  The Board of Directors is hereby 
     authorized, within the limitations and restrictions stated in this 
     Certificate of Incorporation, to fix or alter the individual rights, 
     dividend rate, conversion rights, voting rights, rights and terms of 
     redemption (including sinking fund provisions), the redemption price or 
     prices, the liquidation preference of any wholly unissued shares of 
     Preferred Stock, and the number of shares constituting any such series 
     and the designation thereof, or any of them, and to increase or 
     decrease the number of shares of any series subsequent to the issue of 
     shares of that series, but not below the number of shares of such 
     series then outstanding. In case the number of shares of any series 
     shall be so decreased, the shares constituting such decrease shall 
     resume the status which they had prior to the adoption of the 
     resolution originally fixing the number of shares of such series.

          FIFTH: CLASS B COMMON STOCK.  Subject to the conversion and
     voting rights of the Class B Common Stock described below, the rights
     (including, but not limited to, rights to dividends), preferences,
     privileges and restrictions of the Common Stock and the Class B Common
     Stock shall be identical in all respects, except as follows:

                    (a)  VOTING RIGHTS.  Holders of Class B Common Stock shall
     not be entitled to vote such shares for the election of directors or on any
     other matter except changes or amendment to this Article FIFTH; PROVIDED,
     HOWEVER, that no such change or amendment shall increase the rights of or,
     under any circumstances, provide additional voting rights to the holders of
     Class B Common Stock.

                    (b)  CONVERSION.

                         (i)  RIGHT TO CONVERT.  The holder of any shares of 
     Class B Common Stock shall have the right at such holder's option, at 
     any time or from time to time, to convert any shares of Class B Common 
     stock held by such holder, so long as, after giving effect to such 
     conversion, the total number of Voting Shares (as defined in Section 
     1(b)(vii)(D) hereof) held by such holder or any Affiliate (as defined in 
     Section 1(b)(vii)(A) hereof) of such holder shall be less than or equal 
     to forty-nine percent (49%) (by voting power) of the total number of 
     Voting Shares then issued and outstanding, into such whole number of 
     shares of Common Stock as shall be obtained by multiplying the number of 
     shares


                                        2
<PAGE>


     of Class B Common Stock being converted by the Class B Common Stock 
     Conversion Rate (as hereinafter defined), by surrender of the 
     certificates representing the shares of Class B Common Stock so to be 
     converted in the manner provided in Section 1(b)(iii) hereof The Class B 
     Common Stock Conversion Rate shall be one (1) divided by the Class B 
     Common Stock Conversion Price (as hereinafter defined).  The Class B 
     Common Stock Conversion Price shall initially be one (1); PROVIDED, 
     HOWEVER, that such Class B Common Stock Conversion Price shall be 
     subject to adjustment as set forth in Section 1(b)(v) hereof.  No 
     conversion of shares of Class B Common Stock that would have the effect 
     of giving the holder or any Affiliate of such holder a number of Voting 
     Shares greater than forty-nine percent (49%) (by voting power) of the 
     total number of Voting Shares then issued and outstanding shall be 
     effected pursuant to this Section 1(b)(i).  The holder of any shares of 
     Class B Common Stock exercising the aforesaid right to convert such 
     shares into shares of Common Stock shall be entitled to payment of all 
     declared but unpaid dividends, if any, payable on or with respect to 
     such shares of Class B Common Stock up to and including the Conversion 
     Date (as hereinafter defined).

                    (ii) CONVERSION UPON TRANSFER.  Upon any Transfer (as
     defined in Section 1(b)(vii)(C) hereof) of any shares of Class B Common
     Stock by the original holder thereof, other than a Transfer to an Affiliate
     of such original holder, such shares of Class B Common stock so Transferred
     shall, by virtue of, and simultaneously with, the occurrence of the
     Transfer, without any action on the part of the transferee, be
     automatically converted into such whole number of fully paid and
     nonassessable shares of Common Stock as shall be obtained by multiplying
     the number of shares of Class B Common Stock so Transferred by the Class B
     Common Stock Conversion Rate.  The holder of any shares of Class B Common
     Stock converted into Common Stock pursuant to this Section 1(b)(ii) shall
     be entitled to payment on or with respect to such shares of Class B Common
     Stock up to and including the Conversion Date.

                    (iii)  MECHANICS OF CONVERSION.  The holder of any shares
     of Class B Common Stock may exercise the conversion rights pursuant to
     Section l(b)(i) hereof as to any part thereof by delivering to the
     Corporation during regular business hours, at the office of the Corporation
     or at such other place as may be designated by the Corporation, the
     certificate or certificates for the shares to be converted, duly endorsed
     or assigned in blank, accompanied by a written notice stating that the
     holder elects to convert such shares and stating the name or names (with
     address) in which the certificate or certificates for the shares of Common
     Stock are to be issued.  Conversion shall be deemed to have been effected
     (A) with respect to conversion under Section 1(b)(i) hereof, on the date
     when the aforesaid delivery is made and (B) with respect to conversion
     under Section l(b)(ii) hereof, on the date of occurrence of the Transfer,
     and such date, in either case, is referred to herein as the "CONVERSION
     DATE".  As promptly as practicable after the Conversion Date, and in the
     case of Section 1(b)(ii) hereof,


                                        3
<PAGE>


     upon the delivery to the Corporation during regular business hours, at 
     the office of the Corporation or at such other place as may be 
     designated by the Corporation or at such other place as may be 
     designated by the Corporation, of the certificate or certificates for 
     the shares to be converted, duly endorsed or assigned in blank, the 
     Corporation shall issue and deliver to or upon the written order of such 
     holder, to the place designated by such holder, a certificate or 
     certificates for the number of full shares of Common Stock as provided 
     in Section I (b)(i) and (ii) hereof, and a check or cash in payment of 
     all declared but unpaid dividends (to the extent permissible under law), 
     if any, payable with respect to the shares of Class B Common Stock so 
     converted up to and including the Conversion Date.  The person in whose 
     name the certificate or certificates for Common Stock are to be issued 
     shall be deemed to have become a stockholder of record on the applicable 
     Conversion Date unless the transfer books of the Corporation are closed 
     on that date, in which event he shall be deemed to have become a 
     stockholder of record on the next succeeding date on which the transfer 
     books are open, but the Class B Common Stock Conversion Rate shall be 
     that in effect on the Conversion Date. Upon conversion of only a portion 
     of the number of shares covered by a certificate representing shares of 
     Class B Common Stock surrendered for conversion, the Corporation shall 
     issue and deliver to or upon the written order of the holder of the 
     certificate as surrendered for conversion, at the expense of the 
     Corporation, a new certificate covering the number of shares of Class B 
     Common Stock representing the unconverted portion of the certificate so 
     surrendered, which new certificate shall entitle the holder thereof to 
     dividends on the shares of Class B Common Stock represented thereby to 
     the same extent as if the certificate theretofore covering such 
     unconverted shares had not been surrendered for conversion.

                    (iv)  NO FRACTIONAL SHARES.  No fractional shares of Common
     Stock or scrip shall be issued upon conversion of shares of Class B Common
     stock.  The number of full shares of Common Stock issuable upon conversion
     of Class B Common Stock surrendered by a holder thereof of Class B Common
     Stock surrendered by a holder thereof for conversion shall be computed on
     the basis of the aggregate number of shares of Class B Common Stock so
     surrendered, rounded to the next higher whole number.

                    (v)  ADJUSTMENTS TO CONVERSION PRICE.  The Class B Common
     Stock Conversion Price shall be subject to adjustment from time to time as
     follows:

                       (A)  If, at any time after the Filing Date (as defined
     in Section 1(b)(vii)(B) hereof), the number of shares of Common Stock
     outstanding is increased by a stock dividend payable in shares of Common
     Stock or by a subdivision or split-up of shares of Common Stock, then,
     following the record date fixed for the determination of holders of Common
     Stock entitled to receive such stock dividend, subdivision or split-up, the
     Class B Common Stock


                                        4
<PAGE>


     Conversion Price shall be appropriately decreased so that the number of 
     shares of Common Stock issuable on conversion of each share of Class B 
     Common Stock shall be increased in proportion to such increase in 
     outstanding shares.

                       (B)  If, at any time after the Filing Date, the number
     of shares of Common Stock outstanding is decreased by a combination of the
     outstanding shares of Common Stock, then, following the record date for
     such combination, the Class B Common Stock Conversion Price shall be
     appropriately increased so that the number of shares of Common stock
     issuable on conversion of each share of Class B Common Stock shall be
     decreased in proportion to such decrease in outstanding shares.

                       (C)  In case, at any time after the Filing Date, of any
     capital reorganization, or any reclassification of the capital stock of the
     Corporation (other than a change in par value or from par value to no par
     value or from on par value to par value or as a result of a stock dividend
     or subdivision, split-up or combination of shares) or the consolidation or
     merger of the Corporation with or into another person (other than a
     consolidation or merger in which the Corporation is the continuing
     corporation and which does not result in any change in the Common Stock) or
     of the sale or other disposition of all or substantially all the properties
     and assets of the Corporation as an entirety to any other person, such
     shares of Class B Common Stock shall after such reorganization,
     reclassification, consolidation, merger, sale or other disposition be
     convertible into the kind and number of shares of stock or other securities
     or property of the Corporation or of the Corporation resulting from such
     consolidation or surviving such merger or to which such properties and
     assets shall have been sold or otherwise disposed to which the holder of
     the number of shares of Common Stock deliverable (immediately prior to the
     time of such reorganization reclassification, consolidation, merger, sale
     or other disposition) upon conversion of such share would have been
     entitled upon such reorganization, reclassification, consolidation, merger,
     sale or other disposition.  The provisions of this Section 1(b)(v)(C) shall
     similarly apply to successive reorganization, reclassifications,
     consolidations, mergers, sales or other dispositions.

                       (D)  All calculations under this paragraph (v) shall be
     made to the nearest one tenth (1/10) of a share.


                    (vi)  RESERVATION OF SHARES.  The Corporation shall at all
     times when the Class B Common Stock shall be outstanding, reserve and keep
     available out of its authorized but unissued stock, for the purpose of
     effecting the conversion of the Class B Common Stock, such number of its
     duly authorized shares of Common Stock as shall from time to time be
     sufficient to effect the conversion of all outstanding Class B Common
     Stock; and if at any time the number of authorized but unissued shares' of
     Common Stock shall not be sufficient to effect the conversion of all then
     outstanding shares of Class B


                                        5
<PAGE>


     Common Stock, the Corporation will take such corporate action as may, in 
     the opinion of its counsel, be necessary to increase its authorized but 
     unissued shares of Common Stock to such number of shares as shall be 
     sufficient for the purpose.

                    (vii)  DEFINITIONS.

                       (A)  "AFFILIATE" shall mean, as to any person or entity,
     a person or entity that, directly or indirectly through one or more
     intermediaries, controls, or is controlled by, or is under common control
     with, such person or entity.

                       (B)  "FILING DATE" shall mean the date the Corporation
     files with the Delaware Secretary of State this Amended and Restated
     Certificate of Incorporation.

                       (C)  "TRANSFER" or "TRANSFERRED" shall mean to dispose,
     sell or in any other way directly or indirectly transfer, assign,
     distribute, encumber or otherwise dispose of, either voluntarily or
     involuntarily.

                       (D)  "VOTING SHARES" shall mean any shares of the
     Corporation's capital stock entitled to vote in any election of directors
     of the Corporation.

          SIXTH:  The Corporation is to have perpetual existence.

          SEVENTH:  Whenever a compromise is proposed between this
     Corporation and its creditors or any class of them and/or between this
     Corporation and its stockholders or any class of them, any court of
     equitable jurisdiction within the State of Delaware may, on the
     application in a summary way of this Corporation or of any creditor or
     stockholder thereof or on the application of any receiver or receivers
     appointed for this Corporation under the provisions of Section 291 of
     Title 8 of the Delaware Code or on the application of trustees in
     dissolution or of any receiver or receivers appointed for this
     Corporation under the provisions of Section 279 of Title 8 of the
     Delaware Code order a meeting of the creditors, or class of creditors,
     and/or of the stockholders or class of stockholders of this
     Corporation, as the case may be, to be summoned in such manner as the
     said court directs.  If a majority in number representing three-
     fourths in value of the creditors or class of creditors, and/or of the
     stockholders or class of stockholders of this Corporation, as the case
     may be, agree to any compromise or arrangement and to any
     reorganization of this Corporation as a consequence of such compromise
     or arrangement, the same compromise or arrangement and the said
     reorganization shall, if sanctioned by the court to which the said
     application has been made, be binding on all the creditors or class or
     creditors, and/or on all the


                                        6
<PAGE>


     stockholders or class of stockholders, of this Corporation, as the case may
     be, and also on this Corporation.

          EIGHTH:  For the management of the business and for the conduct
     of the affairs of the Corporation, and in further definition,
     limitation, and regulation of the powers of the Corporation and of its
     directors and of its stockholders or any class thereof, as the case
     may be, it is further provided:

                    (a)  The management of the business and the conduct of the
     affairs of the Corporation shall be vested in its Board of Directors.  The
     number of directors which shall constitute the whole Board of Directors
     shall be fixed by, or in the manner provided in, the Bylaws.  The phrase
     "whole Board" and the phrase "total number of directors" shall be deemed to
     have the same meaning, to wit, the total number of directors which the
     Corporation would have if there were no vacancies.  No election of
     directors need be by written ballot.

                    (b)  After the original or other Bylaws of the Corporation
     have been adopted, amended, or repealed, as the case may be, in accordance
     with the provisions of Section 109 of the General Corporation Law of the
     State of Delaware, and, after the Corporation has received any payment for
     any of its stock, the power to adopt, amend, or repeal the Bylaws of the
     Corporation may be exercised by the Board of Directors of the Corporation;
     provided, however, that any provision for the classification of directors
     of the Corporation for staggered terms pursuant to the provisions of
     subsection (d) of Section 141 of the General Corporation Law of the State
     of Delaware shall be set forth in an initial Bylaw or in a Bylaw adopted by
     the stockholders entitled to vote of the Corporation unless provisions for
     such classification shall be set forth in this certificate of
     incorporation.

                    (c)  Whenever the Corporation shall be authorized to issue
     only one class of stock, each outstanding share shall entitle the holder
     thereof to notice of, and the right to vote at, any meeting of
     stockholders.  Whenever the Corporation shall be authorized to issue more
     than one class of stock, no outstanding share of any class of stock which
     is denied voting power under the provisions of the certificate of
     incorporation shall entitle the holder thereof to the right to vote at any
     meeting of stockholders except as the provisions of paragraph (2) of
     subsection (b) of Section 242 of the General Corporation Law of the State
     of Delaware shall otherwise require; provided, that no share of any such
     class which is otherwise denied voting power shall entitle the holder
     thereof to vote upon the increase or decrease in the number of authorized
     shares of said class.

          NINTH:  The personal liability of the directors of the
     Corporation is hereby eliminated to the fullest extent permitted by
     the provisions of


                                        7
<PAGE>


     paragraph (7) of subsection (b) of Section 102 of the General Corporation
     Law of the State of Delaware, as the same may be amended and supplemented.

          TENTH:  The Corporation shall, to the fullest extent permitted by
     the provisions of Section 145 of the General Corporation Law of the
     State of Delaware, as the same may be amended and supplemented,
     indemnify any and all persons whom it shall have power to indemnify
     under said section from and against any and all of the expenses,
     liabilities, or other matters referred to in or covered by said
     section, and the indemnification provided for herein shall not be
     deemed exclusive of any other rights to which those indemnified may be
     entitled under any Bylaw, agreement, vote of stockholders or
     disinterested directors or otherwise, both as to action in his
     official capacity and as to action in another capacity while holding
     such office, and shall continue as to a person who has ceased to be a
     director, officer, employee, or agent and shall inure to the benefit
     of the heirs, executors, and administrators of such person.

          ELEVENTH:  From time to time any of the provisions of this
     certificate of incorporation may be amended, altered, or repealed, and
     other provisions authorized by the laws of the State of Delaware at
     the time in force may be added or inserted in the manner and at the
     time prescribed by said laws, and all rights at any time conferred
     upon the stockholders of the Corporation by this certificate of
     incorporation are granted subject to the provisions of this Article
     ELEVENTH.

          TWELFTH:  For so long as the board of directors consists of at
     least seven directors, the directors shall be divided into three
     classes, designated Class I, Class II and Class III.  Each class shall
     consist, as nearly as may be possible, of one-third (1/3) of the total
     number of directors constituting the entire Board of Directors.  The
     initial classes shall be elected as follows:  Class I directors shall
     be elected for a one-year term, Class II directors for a two-year term
     and Class III directors for a three-year term.  At each succeeding
     annual meeting of stockholders, successors to the class of directors
     whose term expires at the annual meeting of stockholders shall be
     elected for three-year terms.  If the number of directors is changed,
     any increase or decrease shall be elected for three-year terms.  If
     the number of directors is changed, any increase or decrease shall be
     apportioned among the classes so as to maintain the number of
     directors in each class as nearly equal as possible, and any
     additional director of any class elected to fill a vacancy resulting
     from an increase in such class shall hold office for a term that shall
     coincide with the remaining term of that class, but in no case will a
     decrease in the number of directors shorten the term of any incumbent
     director.  A director shall hold office until the annual meeting for
     the year in which his


                                        8
<PAGE>


     or her term expires and until his or her successor shall be elected and
     shall qualify, subject, however, to prior death, resignation, retirement,
     disqualification or removal from office.  Except as otherwise required by
     law, any vacancy on the Board of Directors that results from an increase in
     the number of directors and any other vacancy occurring in the Board of
     Directors shall be filled by a majority of the directors then in office,
     even if less than a quorum, or by a sole remaining director.  Any director
     elected to fill a vacancy not resulting from an increase in the number of
     directors shall have the same remaining term as that of his or her
     predecessor.

          RESOLVED FURTHER, that the foregoing Restated Certificate of
     Incorporation is hereby approved and adopted.

          IN WITNESS WHEREOF, BEA SYSTEMS, INC. has caused this Certificate to
be signed by William T. Coleman III, its President and Chief Executive Officer,
and attested to by Steven L. Brown, its Secretary, this ____ day of
______________, 1997.

                               BEA SYSTEMS, INC.


                               -----------------------------------------
                               William T. Coleman III
                               President and Chief Executive Officer


ATTEST:


By:
   -------------------------
   Steven L. Brown
   Secretary

                                        9


<PAGE>
                                                                     EXHIBIT 5.1
 
   
                                 March 20, 1997
    
 
BEA Systems, Inc.
385 Moffett Park Drive, Suite 105
Sunnyvale, CA 94089
 
Ladies and Gentlemen:
 
   
    At your request, we have examined the Registration Statement on Form SB-2
filed by BEA Systems, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission on January 31, 1997 and Amendment No. 1
thereto filed on March 20, 1997 (the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended, of up to 5,750,000
shares of the Company's common stock, $.001 par value (the "Stock") (including
750,000 shares subject to the underwriters' over-allotment option), which are to
be offered and sold by the Company. The Stock is to be sold to the underwriters
named in the Registration Statement for resale to the public.
    
 
   
    As counsel to the Company, we have examined the proceedings taken by the
Company in connection with the issuance and sale by the Company of up to
5,750,000 shares of Stock.
    
 
    We are of the opinion that the shares of Stock to be offered and sold by the
Company have been duly authorized and, when issued and sold by the Company in
the manner described in the Registration Statement and in accordance with the
resolutions adopted by the Board of Directors of the Company, will be legally
issued, fully paid and nonassessable.
 
    We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement, the prospectus constituting a part thereof and any amendments
thereto.
 
   
                                          Very truly yours,
                                          /s/ Morrison & Foerster LLP
    

<PAGE>
                                            Confidential treatment has
                                            been requested regarding these
                                            provisions indicated by "[***]"

                        TUXEDO License and Distribution Agreement

     This TUXEDO License and Distribution Agreement (the "Agreement") is made
by and between Novell, Inc., a Delaware corporation with a place of business at
122 East 1700 South, Provo, Utah, 84606 ("Novell"), and BEA Systems, Inc.,
("BEA") a Delaware corporation with its principal place of business located at
2465 E. Bayshore Road, Palo Alto, California 94303.

1    STATEMENT OF PURPOSE.  Novell has acquired and/or developed and is the
     owner of, or otherwise has authority to license, the TUXEDO Software
     identified in Exhibit A.  Novell desires to grant to BEA certain rights
     and licenses relating to the TUXEDO Software, as set forth in this
     Agreement, and to transfer to BEA certain assets relating to the TUXEDO
     Software, and BEA desires to obtain the same from Novell.

2    DEFINITIONS.  Unless the context clearly requires otherwise, the
     capitalized terms used within this Agreement shall have the same meaning
     as ascribed to the terms below.  The term "Section" within this Agreement
     refers to the identified section of this Agreement.

     2.1  ADD-ONS shall mean any new feature enhancements or additions not
          already present in  the Core Code which exist external to the Core
          Code, do not consist of Core Code and are not required for full
          functionality of the Core Code.

     2.2  ASSUMED CONTRACTS shall mean all existing licenses, service
          contracts (including documentation), independent contractor
          agreements, and other agreements between Novell and another party
          relating to the TUXEDO Software, with the exception of Novell's
          Master Task Agreement with Novell Japan, Ltd. and related Statements
          of Work.
          
     2.3  BEA shall mean BEA Systems, Inc., except in any cases where the
          parties may specifically call out other subsidiaries or entities
          related to BEA.

     2.4  CHANGE OF CONTROL shall mean when, due to a change in ownership
          after the Closing:
     
          2.4.1   one of the parties becomes a Subsidiary of some
                  third-party; or

          2.4.2   any person or group (within the meaning of Rule 13d-5 
                  under the Securities Exchange Act as in effect on the
                  date of execution of this Agreement) shall come to own, 
                  directly or indirectly, beneficially or of record, 
                  voting securities representing more than 50% of the total 
                  voting power of one of the parties.  For the purpose of 
                  this Agreement, the parties agree to an exception in the 
                  above-referenced definition of "any person or group" to 
                  exclude E.M. Warburg, Pincus & Co. and its affiliated 
                  entities.

     2.5  CLOSING shall mean the closing of the transactions contemplated
          by this Agreement, which shall occur on the Closing Date.

                                 PAGE 1
<PAGE>

     2.6  CLOSING DATE shall mean February 23, 1996 or such other date as
          the parties may hereafter agree upon.

     2.7  CODE  shall mean computer programming code. Unless otherwise
          agreed, Code shall include Binary Code and Source Code in the form
          existing as of the Closing Date.

     2.8  BINARY CODE shall mean Code that loads and executes without
          further processing by a software compiler or linker or that results
          when Source Code is processed by a software compiler.

     2.9  SOURCE CODE shall mean the human-readable form of the Code and
          related system documentation, including all comments and any
          procedural language.

     2.10 COMMITTEE shall mean the Technology Coordination Committee to be
          formed by BEA and Novell, as further described in Section 6 below.

     2.11 CONFIDENTIAL INFORMATION shall mean that information which
          relates to the purpose of this Agreement as stated in Section 0 that
          a Disclosing Party desires to protect against unrestricted disclosure
          or use by the Receiving Party and which if disclosed (i) in tangible
          form, is marked in writing as "confidential" or with words of similar
          import by the Disclosing Party, or (ii) in oral or visual form, is
          designated orally at the time of disclosure as "confidential."  The
          foregoing notwithstanding, Source Code shall be deemed to be
          Confidential Information; otherwise, any information that is not
          identified as "confidential" shall be regarded as non-Confidential
          Information.  Confidential Information shall not include any
          information that is (i) already in the possession of the Receiving
          Party without obligation of confidence; or (ii) independently
          developed by the Receiving Party; or (iii) or becomes available to
          the general public without breach of this Agreement; or (iv)
          rightfully received by the Receiving Party from a third party without
          obligation of confidence; or (v) disclosed after obtaining the
          written consent of the Disclosing Party.

     2.12 CORE CODE shall mean the workstation (\WS) and server (\T)
          TUXEDO Software Code as delivered by Novell to BEA pursuant to
          Section 15.

     2.13 CORE MODIFICATIONS shall mean modifications to any version
          of the TUXEDO Software Code, whether made by Novell, BEA,
          Subsidiaries, affiliates, or contractors, that are not Add-ons.  The
          parties specifically agree that, in the event modifications are made
          to the Core Code that enable the Core Code to interact with software
          outside of the Core Code that creates new functionality, only the
          "hooks" or other modifications made to the Core Code itself shall be
          deemed Core Modifications; such software outside of the Core Code
          shall not be deemed Core Modifications, regardless of the existence
          of the hooks to such software that exist within the Core Code itself.

     2.14 DERIVATIVE WORK shall mean a work which is based upon or
          incorporates one or more preexisting works, such as a revision,
          modification, translation, abridgement, condensation, expansion,
          collection, compilation or any other form in which such preexisting
          works may 


                                 PAGE 2
<PAGE>

          be recast, transformed or adapted, and which, if prepared 
          without the authorization by the owner of the preexisting works,
          would constitute copyright infringement under U.S. copyright laws.

     2.15 DISCLOSING PARTY shall mean the party to this Agreement which
          transmits information to a Receiving Party.

     2.16 DOCUMENTATION shall mean the written or electronic instructions
          provided to end users with a computer program.

     2.17 NOVELL DOCUMENTATION shall mean the Documentation provided by
          Novell to end users relating to the TUXEDO Software.

     2.18 BEA DOCUMENTATION shall mean the Documentation provided by BEA
          to end users relating to the TUXEDO Software.

     2.19 SIGNING DATE shall mean the latter of the dates upon which the
          parties execute this Agreement.

     2.20 EXTREMELY SENSITIVE INFORMATION shall mean Confidential
          Information with respect to which the Disclosing Party reasonably
          believes unauthorized disclosure would have a serious adverse effect,
          commercial or competitive, on the Disclosing Party.  Confidential
          Information will only be considered Extremely Sensitive Information
          if prior to its disclosure the Disclosing Party gives written notice
          to the Receiving Party of the information's general description and
          its Extremely Sensitive Information classification.

     2.21 INITIAL TERM shall have the meaning given to such term in
          Section 14 below.

     2.22 MARK shall mean Novell's "TUXEDO" trademark.

     2.23 RECEIVING PARTY shall mean the party to this Agreement which
          receives information from a Disclosing Party.

     2.24 SUBSIDIARY shall mean a corporation, company or other entity (i)
          more than fifty percent (50%) of whose outstanding shares or
          securities (representing the right to vote for the election of
          directors or other managing authority) are, or (ii) which does not
          have outstanding shares or securities, as may be the case in a
          partnership, joint venture or unincorporated association, but more
          than fifty percent (50%) of whose ownership interest representing the
          right to make the decisions for such corporation, company or other
          entity is, now or hereafter, owned or controlled, directly or
          indirectly, by a party hereto, but such corporation, company or other
          entity shall be deemed to be a Subsidiary only so long as such
          ownership or control exists.

     2.25 TRANSFERRED ASSETS shall mean (i) certain items of equipment,
          furnishings and other personal property previously used by Novell's
          TUXEDO division, as listed in Exhibit D; 


                                 PAGE 3
<PAGE>

          and (ii) all of Novell's shares of stock in the following 
          entities: USL Mexico and USL SA as identified in Exhibit D.

     2.26 TUXEDO SOFTWARE shall mean the Code more fully described in
          Exhibit A, including, Core Code and Core Modifications.

3    CLOSING.  The transactions contemplated by this Agreement shall be closed
     on the Closing Date, at a mutually agreeable time and place.

     3.1  DELIVERIES BY NOVELL.  At the Closing, Novell shall deliver to
          BEA the following documents and materials:

          3.1.1  The Transferred Assets listed in Exhibit D
                 hereto;

          3.1.2  A duly executed bill of sale in the form attached
                 as Exhibit I hereto; and

          3.1.3  Such additional documents, instruments and
                 materials as Novell may be required to deliver to BEA at the
                 Closing pursuant to this Agreement.

     3.2  DELIVERIES BY BEA.  At the Closing, BEA shall deliver to Novell
          the following documents and materials:

          3.2.1  A duly executed guaranty in the form attached as
                 Exhibit G hereto (the "Guaranty");

          3.2.2  A copy of a certified resolution of BEA's board
                 of directors, authorizing execution of this Agreement and
                 approving the transactions described herein.

          3.2.3  Such additional documents, instruments and
                 materials as BEA may be required to deliver to Novell at the
                 Closing pursuant to this Agreement.

     3.3  CONDITIONS TO CLOSING.  The obligations of Novell and BEA
          hereunder to proceed with the Closing shall be subject to the
          following conditions, each of which may only be waived at or before
          the Closing as agreed upon in writing by the parties:

          3.3.1  The warranties and representations of the other
                 party shall be true and correct in all material respects as 
                 of the Closing; and

          3.3.2  The other party shall have fully performed all of
                 its material obligations required to be performed at or before
                 the Closing.

     3.4  FINANCIAL STATEMENTS.  On or before July 31, 1996, Novell will
          provide BEA with audited financial statements for the TUXEDO business
          unit, or its predecessor organizations, covering fiscal years 1993,
          1994 and 1995.  If audited financial statements are not available for
          any of these periods, Novell will provide BEA and its auditors access
          to the financial 


                                 PAGE 4
<PAGE>

          and business records of the TUXEDO business unit so that they 
          may prepare such statements, or at Novell's option, Novell or its 
          auditors may prepare such statements themselves and deliver them 
          to BEA.

     3.5  ADJUSTMENT OF PAYMENTS.  Novell acknowledges that BEA has not
          had an opportunity prior to the Signing Date to review all of the
          Assumed Contracts and other documents relating to the Transferred
          Assets.  Accordingly, if material  deviations are discovered from the
          representations and warranties made by Novell under this Agreement
          relating to the Assumed Contracts and other Transferred Assets, an
          adjustment of the amount of the payments due under Sections 13.1 and
          14.2 will be made at the Closing to reasonably reflect the
          deviations, provided that in no event shall such an adjustment exceed
          ten percent (10%) of the first year payments.

     3.6  OBTAINING BENEFIT OF ASSUMED CONTRACTS.  At the written request
          of BEA, Novell will take all commercially  reasonable action, and
          cause  its affiliates to take all commercially reasonable  action, in
          order that BEA may obtain the full benefit and enjoyment of the
          Assumed Contracts.

4    LICENSES.

     4.1  Subject to the terms and conditions specified in this
          Agreement, Novell hereby grants, and BEA hereby accepts, a world-
          wide, non-transferable (except as otherwise provided herein) license:

          4.1.1  to use, duplicate, revise, modify, enhance,
                 condense, expand, collect, compile, link, adapt, translate,
                 localize, port, merge or recast TUXEDO Software Source Code;

          4.1.2  subject to Section 0, to reproduce, distribute,
                 and sublicense Source Code;

          4.1.3  to install, use, duplicate, market (directly and
                 indirectly), distribute, merge, package, bundle, and 
                 sublicense, Binary Code of TUXEDO Software, and to authorize 
                 others to perform all or some of the above;

          4.1.4  subject to Section 0, to use, duplicate, revise,
                 modify, enhance, condense, expand, collect, compile, link,
                 adapt, translate, publish, reissue, or recast Novell
                 Documentation solely to provide, market and distribute BEA
                 Documentation for TUXEDO Software, and to authorize others to
                 do all or some of the above;

          4.1.5  to use Novell Confidential Information, including
                 materials bearing a Novell patent or copyright notice, but only
                 as necessary to exercise its rights under this Section.  This
                 provision shall not be construed to grant any distribution or
                 duplication rights or any rights to modify such Confidential
                 Information; and

          4.1.6  in the event this Agreement is terminated (other than 
                 termination due to material breach), Novell grants, and BEA
                 accepts, a terminable, non-exclusive, 


                                 PAGE 5
<PAGE>

                 non-transferrable, fully paid-up, worldwide license to use 
                 TUXEDO Software Source Code solely to support BEA's then 
                 installed base of TUXEDO Software. This conditional license 
                 shall automatically expire ten years from the date of last 
                 customer shipment of TUXEDO Software, which shall not extend 
                 by inference the rights granted in Section 0 beyond 
                 termination or expiration of this Agreement. Further, this 
                 conditional license shall be subject to termination for the 
                 material breach of those sections surviving termination 
                 pursuant to Section 0.

     4.2  BEA acknowledges that Novell does not own the localizations and
          translations that Novell Japan, Ltd., a majority-owned Subsidiary of
          Novell in Japan, or Novell Japan's sublicensees have made or
          contracted to be made to any of the TUXEDO Software, which
          localizations and translations are not subsumed under the definitions
          thereof.  BEA acknowledges that, should BEA desire to obtain such
          rights or otherwise enter into an agreement respecting those rights,
          that it must obtain those rights from, or enter into an agreement
          respecting such rights with, Novell Japan or its sublicensees.  In
          this regard, Novell agrees to exercise commercially reasonable
          efforts to facilitate negotiations between Novell Japan. Ltd. and
          BEA.  In addition, Novell represents and warrants that it has not
          granted to Novell Japan, Ltd. or any other party any exclusive rights
          with regard to the distribution of non-localized versions of TUXEDO
          Software in Japan.

5    DISTRIBUTION AND MARKETING; EXCLUSIVITY.

     5.1  BEA DISTRIBUTION AND MARKETING RIGHTS.  During the Initial Term,
          BEA shall have the exclusive right to market, distribute and
          sublicense the TUXEDO Software in all markets and distribution
          channels worldwide, subject to the exceptions granted Novell below,
          existing licenses granted by Novell to third parties, and to the
          terms and conditions of this Agreement.  The foregoing includes,
          without limitation, the right to market and sublicense TUXEDO
          Software to OEMs, VARs and ISVs for integration into their product
          offerings, as well as directly to end users.

     5.2  NOVELL DISTRIBUTION AND MARKETING RIGHTS.

          5.2.1  Novell shall retain the exclusive right to market, 
                 distribute and sublicense TUXEDO Software (\T) for the 
                 NetWare operating system platform (currently NetWare 
                 Transactions and TransactionLink), as well as the right to 
                 market, distribute and sublicense TUXEDO Software technology 
                 or any portions thereof, whether at the \WS or \T level, as 
                 a feature or component of other Novell software (e.g., 
                 utilizing TUXEDO Software as a messaging component in 
                 GroupWise or as a component included within NetWare). Except 
                 as set forth above, Novell shall not sell TUXEDO Software as 
                 a stand-alone product or in any bundle where TUXEDO is the 
                 only product of substantial value to the end user, whether 
                 under the TUXEDO name or another name.

          5.2.2  Novell retains the right to expose TUXEDO API's within the 
                 NetWare Transactions SDK (Software Developers Kit). Novell 
                 also shall retain the right to 

                                 PAGE 6
<PAGE>

                 use all TUXEDO programming and administration API's in the 
                 creation of its own product set where TUXEDO functionality 
                 is embedded in Novell products. Other than as set forth 
                 above, Novell will not expose TUXEDO programming and 
                 administrative API's for use by developers, users, or others 
                 external to Novell who are creating or using applications, 
                 administrative tools, or other functions for their own use 
                 or resale; nevertheless, Novell retains the right to expose 
                 interface abstractions (e.g. IDL, OCX, C++, etc.) to 
                 developers that will allow developers or users to take 
                 advantage of Novell services and products employing TUXEDO 
                 technology or offering TUXEDO functionality.  However, 
                 except as set forth above regarding NetWare Transactions and 
                 TransactionLink and except as to software developers kits, 
                 Novell shall not ship product containing the abstractions 
                 that allow use of the TUXEDO functionality for one year 
                 following Closing.

          5.2.3  BEA acknowledges that Novell will be retaining one or more 
                 copies of the TUXEDO Software Source Code, including all 
                 modifications and enhancements made thereto until the 
                 Closing Date, and that Novell shall have the perpetual right 
                 after the Closing Date to further modify and to market and 
                 distribute the TUXEDO Software as permitted by this 
                 Agreement, subject to the exclusive rights granted to BEA 
                 hereunder.

          5.2.4  Novell shall have the option to license and distribute, 
                 under the Novell name, the TUXEDO client software (\WS) as 
                 part of its Transactions and TransactionLink product set.  
                 BEA will offer Novell terms no less favorable than those 
                 offered to other BEA distributors, but in no event shall the 
                 discount from suggested list price be less than 65% during 
                 the Initial Term.  In addition, Novell retains the right to 
                 bundle, at no cost to Novell, 25 client software (\WS) 
                 licenses with the NetWare Transactions SDK (Software 
                 Developers Kit) for use by external application developers 
                 who are developing applications for use on NetWare via 
                 NetWare Transactions.

     5.3  TERM OF EXCLUSIVITY. The exclusive rights granted above to BEA
          shall become non-exclusive at the end of the Initial Term, unless BEA
          elects to continue marketing and licensing TUXEDO Software pursuant
          to the option given it in Section 14.2.

     5.4  REFERENCE SELLING BY NOVELL.  Novell may "reference sell" the
          TUXEDO Software (including Core Modifications made by BEA) to
          Novell's customers. Such sales efforts will be turned over to BEA
          sales representatives in order for BEA to close deals with the Novell
          customer.  For all such reference sales efforts that result in BEA
          granting TUXEDO Software licenses to Novell's customers, Novell shall
          receive from BEA a finders fee equal to 10% of the standard TUXEDO
          Software License Fee charged by BEA.  As part of the transition
          period, Novell will have an affirmative obligation to inform BEA of
          all "deals in progress" and provide reasonable assistance to BEA to
          allow BEA to take over the handling of those deals.


                                 PAGE 7
<PAGE>

6    TECHNOLOGY COORDINATION COMMITTEE.

     6.1  FORMATION; MEMBERSHIP.  The Committee shall be formed by BEA and
          Novell promptly after the Closing Date and shall exist throughout the
          Initial Term, unless otherwise agreed by both parties.  Membership of
          the Committee shall consist of two (2) representatives named by
          Novell and two (2) representatives named by BEA.  Such
          representatives shall be knowledgeable and qualified to perform their
          duties on the Committee.  The Committee shall meet at least
          quarterly, at mutually agreeable times and places.

     6.2  RESPONSIBILITIES.  The Committee shall have the following
          responsibilities:

          6.2.1  Coordinate plans for future development of the TUXEDO 
                 Software and ensure interoperability between BEA's and 
                 Novell's developments with respect to the TUXEDO Software 
                 during the Initial Term.

          6.2.2  Approve the development and release process for new versions 
                 of TUXEDO Software, including both Core Modifications and 
                 Add-ons, to ensure that released software is of a quality 
                 consistent with Novell's products.

           6.2.3  Patents:

                  6.2.3.1   The parties recognize the value of
                    patents dealing with TUXEDO Software.  In this regard, BEA
                    agrees to provide to Novell reasonable assistance in the
                    prosecution of patent applications existing as of the
                    Closing Date and the enforcement of those applications
                    should they be issued as patents.  The Committee will
                    oversee the requests for assistance from Novell and the
                    coordination of efforts to secure patents from existing
                    patent applications, including PCT and other international
                    rights.

                  6.2.3.2   The Committee will coordinate the
                    timely assistance of BEA personnel in the completion of
                    Novell's Invention Disclosure Forms for the identification
                    of patentable subject matter related to the Core Code and
                    Core Modifications in the development of TUXEDO Software.
                    The parties contemplate the possibility of filing patent
                    applications during the course of TUXEDO Software
                    development and agree to use commercially reasonable
                    efforts to complete all invention disclosures in a timely
                    manner to allow for maximum patent coverage both in the US
                    and internationally.  The Committee will provide for Novell
                    legal department personnel to spend time with the TUXEDO
                    Software developers to ascertain whether any new Core
                    Modifications are patentable on at least a quarterly basis.
                    Prior to the release of any new software containing a Core
                    Modification covered by an Invention Disclosure Form,
                    Novell's legal department shall have an opportunity of not
                    more than 45 days after the completion of an Invention
                    Disclosure Form to ascertain whether patent protection
                    should be sought for new or improved features prior to loss
                    of international filing 



                                 PAGE 8
<PAGE>

                    rights due to public disclosure or
                    any offer for sale.  BEA agrees to provide to Novell
                    reasonable assistance in the disclosure and filing of
                    patent applications related to Core Code and Core
                    Modifications.

          6.2.4  The parties specifically agree that the Committee shall have 
                 responsibility only for coordinating and approving the plans 
                 and processes as set forth in Sections 6.2.1, 6.2.2, and 
                 6.2.3 above, and not for making any other decisions with 
                 respect to the TUXEDO Software.

     6.3  DISPUTE RESOLUTION.  In the event a party disagrees with the
          Committee's position on an issue, each party shall be entitled to
          appoint two (2) additional members to the Committee, of Vice
          President level or higher, to facilitate resolving the dispute.
          Alternatively, the parties may agree to escalate the dispute to
          senior management within each company to seek a resolution at such
          level.

7    CONTRACT ADMINISTRATION.  To facilitate an effective relationship and
administration of and compliance with this Agreement, the parties hereby
appoint the following contacts:

                    Novell:        Mark Epstein
                                   Novell, Inc.
                                   122 East 1700 South
                                   Provo, Utah 84606

                    BEA:           Edward W. Scott, Jr.
                                   BEA Systems, Inc.
                                   2465 E. Bayshore Dr.
                                   Palo Alto, California 94303

Each party's contact person shall be responsible for managing that party's
performance under this Agreement and all necessary coordination with the other
party.  Each party will advise the other in writing of any change regarding its
appointed contact person.  The BEA contact person listed above (or his
designee) shall monitor and report quarterly on BEA's compliance with
contractual obligations under this Agreement, including but not limited to
staffing requirements, development progress, providing Novell with Core
Modifications, revenue targets, revenue reporting, and finders fees
calculations as required pursuant to Section 5.4.  Such reports shall be
provided within 30 days after the end of each calendar quarter to the Novell
contact person set forth above and to:

                    Novell:        Contract Accounting
                                   Novell, Inc.
                                   2180 Fortune Drive
                                   MS F6-54-2
                                   San Jose, CA  95131
                                   Fax: (408) 577-5553


                                 PAGE 9
<PAGE>

8    OBLIGATIONS OF BEA.

     8.1  DEVELOPMENT STAFF.  BEA shall employ at the end of each year no
          less than the following numbers of full-time (or full-time
          equivalent) developers, devoted to TUXEDO Software development,
          during the Initial Term:

               1996:     35 developers
               1997:     47 developers
               1998:     62 developers

     8.2  MARKETING AND SALES REQUIREMENTS.  BEA shall be required to meet
          the following minimum sales/revenue requirements during the Initial
          Term:

               1996:  $30 million in gross sales of, and other revenues 
                      from, TUXEDO Software (including all versions thereof), 
                      and professional and technical services (such as 
                      support and maintenance) related to TUXEDO Software
               1997:  $50 million in gross sales and revenues, as described
                      above
               1998:  $80 million in gross sales and revenues, as described
                      above

          The parties acknowledge that Novell's requirement of minimum
          sales and revenues amounts is appropriate and reasonable, given
          Novell's grant of exclusive rights to BEA and Novell's interest in
          preserving the market for TUXEDO Software, particularly in the event
          this Agreement is terminated.  In any event, BEA shall use
          commercially reasonable efforts to actively market TUXEDO Software
          for those markets to which BEA is given distribution rights
          hereunder. In the event BEA does not meet the above minimum
          sales/revenue requirements, Novell shall have the following rights:
          If BEA makes at least 50% of the minimum revenue requirement for a
          particular year but less than 90%, Novell shall have the right, upon
          written notice, to cancel BEA's exclusivity rights under this
          Agreement, thereby making all licensed rights of BEA during the
          Initial Term non-exclusive.  Rights obtained by BEA should it
          exercise its option pursuant to Section 14.2 will be subject to any
          licenses or other rights granted by Novell to other parties  during
          this period of nonexclusivity.  If BEA makes less than 50% of the
          minimum revenue requirement for a particular year, such failure shall
          be deemed a material default and grounds for Novell to terminate this
          Agreement.

     8.3  DEVELOPMENT OBLIGATIONS

          8.3.1  INTEGRATION OF TUXEDO SOFTWARE WITH NDS.  After the Closing 
                 Date, BEA shall continue development work on the integration 
                 of the TUXEDO Software with Novell's NDS software as a name 
                 server and a security server (providing authentication 
                 security and single sign-on for NetWare clients accessing 
                 information in NDS, and enabling of the NDS administrator to 
                 locate, browse, and set user access privileges to 
                 TUXEDO-based applications on Unix or NT using NDS security 
                 permissions). These capabilities will optionally augment and 
                 enhance the TUXEDO Software's current internal versions of 
                 these services. The 

                                 PAGE 10
<PAGE>

                 specifications for such product, the acceptability of the 
                 final product, and dependencies on NDS technology and 
                 interfaces required to complete the product shall be 
                 determined by good faith negotiations between the parties 
                 within ninety (90) days of the Closing Date, and shall be 
                 set forth in a Statement of Work executed by both parties.  
                 In the event the parties are unable to agree upon such a 
                 Statement of Work that is reasonably acceptable to Novell 
                 within such time frame, Novell shall have the option to 
                 terminate and rescind this Agreement.  If such product is 
                 not completed until after the target date set by the 
                 Statement of Work, BEA shall pay to Novell the following 
                 amounts as compensation for the damages to Novell due to the 
                 lack of such product in the market:

                 Less than one month late:     no payment
                 One to four months late: $100,000
                                     for each month or portion thereof after the
                                     initial due date
                 More than four months late:
                                     $500,000 for each month or portion thereof
                                     after the fourth month

                 For example, if BEA is four months late, it owes to
                 Novell $400,000; if BEA is five months late, it owes to Novell
                 $900,000.
 
                 Novell estimates that the NDS integration work described 
                 above shall not exceed seven developer-years. The Statement 
                 of Work shall include the parties' definitive assessment of 
                 the time and work required to complete the integration; to 
                 the extent such assessment exceeds the above estimate, 
                 Novell shall pay BEA for the excess costs on a time and 
                 materials basis, to be set forth in the Statement of Work. 
                 Time and cost overruns incurred by BEA after execution of 
                 the Statement of Work shall be the responsibility of BEA, 
                 unless resulting from a modification requested by Novell 
                 after execution of the Statement of Work for which Novell 
                 has agreed to compensate BEA.

          8.3.2  KNOWLEDGE TRANSFER. In order to promote effective 
                 interoperability of products produced by the parties, BEA 
                 shall provide to Novell, upon a mutually agreeable schedule, 
                 up to two engineer-years of time during the Initial Term to 
                 assist Novell in implementing TUXEDO code, features, and 
                 functionality within Novell products. Engineers providing 
                 these services to Novell shall assist in training and such 
                 other aspects of technology and knowledge transfer as may be 
                 reasonably requested by Novell.

     8.4  INTEROPERABILITY.  To the extent that Novell does not
          substantially modify the interfaces to its Transaction Link and
          Transactions products, during the Initial Term BEA shall, in making
          modifications to the TUXEDO Software, make all  commercially
          reasonable efforts to maintain the interoperability of the TUXEDO
          Software  and Novell's TransactionLink product.  To facilitate this
          effort, Novell shall timely provide interface specifications and
          other information  regarding the TransactionLink product to BEA.  If
          Novell does substantially modify the interfaces to its Transaction
          Link or Transaction 


                                 PAGE 11
<PAGE>

          products, and the Committee decides that it is important to 
          continue to maintain interoperability, then BEA and Novell agree 
          to negotiate in good faith on a reasonable NRE fee and other 
          terms and conditions under which BEA will make, if it is 
          commercially reasonable to do so, the necessary modifications to 
          the TUXEDO Software to maintain that interoperability.
 
     8.5  BINARY CODE SUBLICENSING.

          8.5.1  RESELLER AGREEMENTS.  BEA agrees to require each reseller, 
                 distributor, OEM, vertical solution provider, systems 
                 integrator, vertical market reseller, and value added 
                 reseller of TUXEDO Software to enter into a written 
                 agreement with BEA before any TUXEDO Software is provided to 
                 the reseller.  The agreement shall include provisions 
                 consistent with this Agreement.

           8.5.2 END USER AGREEMENTS.  BEA agrees to license each Binary 
                 Code copy of TUXEDO Software to end users by means of a 
                 sublicense, which may include a "shrink-wrapped," "box-top" 
                 or equivalent license.  The license shall provide 
                 substantially the same level of protection for Novell's 
                 interests in the TUXEDO Software as contained in Novell's 
                 form of license for the TUXEDO Software.  Notwithstanding 
                 the foregoing, the licenses under which BEA makes the TUXEDO 
                 Software will provide at least the level of protection which 
                 is customary for similar software in the United States.  In 
                 the event TUXEDO Software is distributed under a VAR's, 
                 OEM's or other third party's form of  end user license 
                 rather than BEA's form, BEA shall require that the third 
                 party's end user license and enforcement efforts meet the 
                 requirements of this Section 0.

          8.5.3  ENFORCEMENT.  BEA agrees to use legally and commercially 
                 reasonable efforts to enforce the agreements contemplated by 
                 this Section 0.

     8.6  MANUFACTURING; QUALITY CONTROLS.   All TUXEDO Software and
          related materials (packaging, documentation, promotional materials,
          etc.) manufactured by or for BEA shall be of a high quality,
          consistent with the standards of Novell and BEA, and shall
          substantially conform to Novell's quality controls existing as of the
          Closing Date and which may be changed periodically as commercially
          reasonable or required by law.  BEA agrees to promptly provide to
          Novell with a sample copy of each TUXEDO Software product, as well as
          related materials, produced by each manufacturing location utilized
          by BEA in connection with this Agreement, for Novell's review for
          compliance with quality and trademark usage provisions. Novell shall
          promptly provide BEA with written notice of all quality standards and
          controls, and any changes thereto.

     8.7  ASSUMPTION OF CONTRACTUAL OBLIGATIONS FOR TRANSFERRED ASSETS.
          BEA acknowledges that Novell has certain obligations with respect to
          its ownership of shares in USL Mexico and USL SA, and that these two
          companies have contractual obligations to Novell. Novell will provide
          to BEA, promptly after the Signing Date, copies of all agreements
          containing those obligations, as well as accounting and other
          information regarding loans and payables 


                                 PAGE 12
<PAGE>

          between the companies and Novell, and terms applicable thereto. 
          BEA shall have the option at Closing to accept or reject transfer 
          of the shares in USL Mexico and/or USL SA, provided that if BEA 
          accepts such transfer, BEA agrees to (i) assume Novell's obligations
          with respect to ownership of the shares; (ii) to cooperate with the 
          other owners of shares in the companies to cause the companies to 
          meet their obligations to Novell; and (iii) in the event of 
          receipt of payment from USL Mexico or USL SA prior to satisfaction 
          by such companies of their then current financial obligations to 
          Novell, to forward such payments to Novell to be applied against 
          such obligations to Novell.

          BEA acknowledges that USL Mexico and USL SA have loans and
          payables owed to Novell that are outstanding as of the Signing Date.
          If either company does not make any required payment to Novell of any
          such loan or payable amounts within thirty (30) days after Novell
          gives notice to such company that the payment is past due, then BEA
          agrees that: (i) BEA will make all commercially reasonable efforts to
          make the company make such payment, including without limitation
          terminating any Assumed Contract or other distribution agreement with
          the company until such payment is made, or (ii) at BEA's sole option,
          BEA may itself pay such amounts to Novell.

     8.8  CONFORMITY BY BEA SUBSIDIARIES. BEA shall cause all of its
          Subsidiaries to conform to all applicable terms and conditions of
          this Agreement.

9    OBLIGATIONS OF NOVELL.

     9.1  BEA DISTRIBUTORSHIP. Pursuant to the standard terms and
          conditions, Novell agrees that it will offer to BEA a Novell
          distribution agreement which includes the right to distribute NetWare
          Transactions, TransactionLink, and any other TUXEDO-based products
          offered by Novell under terms as favorable as those offered to
          similarly situated distributors.  Pursuant to the terms and
          conditions of any such Novell distribution agreement, BEA may
          distribute other Novell products on Novell's then-current price list
          under Novell's standard pricing discount structure.

     9.2  ENTERPRISE SALES PROGRAM.  On the Closing Date or promptly
          thereafter, Novell shall enroll BEA as a participant in Novell's
          Enterprise Sales Program, and shall permit BEA to continue to
          participate in such program, so long as it exists and BEA meets the
          requirements for participation therein, throughout the Initial Term,
          so long as this Agreement is in effect.


                                 PAGE 13
<PAGE>

10   RESTRICTIONS.

     10.1 SOURCE CODE SUBLICENSING.  Sublicenses of Source Code shall only
          be granted upon, and shall be subject to, terms and provisions which
          meet or exceed those included as Exhibit F.  During the Initial Term,
          BEA shall give Novell written notice of each third party to whom a
          Source Code sublicense for TUXEDO Software has been given, within
          thirty (30) days of the date such sublicense has been finalized.
          Novell shall treat such list of names as Confidential Information
          and, except in the event of termination of this Agreement, shall not
          utilize the names or information on such list other than for purposes
          of this Agreement.

     10.2 NETWARE PLATFORM RESTRICTIONS.  Notwithstanding any other terms
          of this Agreement, BEA shall not develop or modify TUXEDO Software
          for use on the NetWare platform; such rights are reserved by Novell.
          However, at the request of Novell, and for a reasonable fee as
          negotiated by the parties at such time, BEA shall  assume development
          of TUXEDO Software for NetWare and add such features and functions
          thereto as are agreed upon by the parties, as work for hire to be
          owned by Novell.  The timing of delivery of such development efforts
          shall be subject to prior engagements and internal development
          schedules of BEA.  Novell agrees to consider in good faith any
          request by BEA for rights to sublicense and distribute the TUXEDO
          Software for NetWare product.

     10.3 RESTRICTIONS ON SALE OR ASSIGNMENT.  The parties agree that
          their rights to sell their interests in TUXEDO Software or to assign
          their interests under this Agreement shall be limited as follows:

          10.3.1 Novell shall not grant or sell to any third party 
                 ownership to the Core Code until after the end of the 
                 Initial Term, unless BEA gives its prior consent thereto in 
                 writing. Additionally, during the Initial Term, Novell shall 
                 not transfer any of its rights in the TUXEDO Software to 
                 Microsoft Corporation ("Microsoft"), IBM Corporation, Oracle 
                 Corporation, Sybase or Informix, absent prior written 
                 consent of BEA.  In any event, Novell agrees that it shall 
                 not transfer to a third party its rights to Core 
                 Modifications developed by BEA hereunder, absent prior 
                 written consent of BEA; however, the foregoing shall not be 
                 construed to limit Novell's right to sublicense to third 
                 parties the Core Modifications as a part of Novell products 
                 which Novell is otherwise permitted to distribute under this 
                 Agreement.

          10.3.2 During the Initial Term, neither party shall license or 
                 otherwise transfer any rights in the TUXEDO Software to 
                 Microsoft or any affiliate thereof.  The foregoing includes 
                 any transfer of rights via a Change of Control to Microsoft 
                 or an affiliate thereof.  The foregoing sentence does not 
                 prohibit BEA from being acquired as a subsidiary by 
                 Microsoft in connection with a public offering of BEA's 
                 stock, but does prohibit Microsoft from merging with BEA or 
                 otherwise obtaining access to the TUXEDO Software, 
                 notwithstanding Microsoft's ownership of BEA stock.

          10.3.3 Notwithstanding Section 25.11 below, and other than as 
                 forth in subsection 10.3.2, neither party shall be 
                 restricted from a transfer of its rights and obligations in

                                 PAGE 14
<PAGE>

                 connection with a Change of Control in such party; 
                 provided, however, that in the event of a contemplated 
                 Change of Control in BEA, BEA shall give Novell prior 
                 written notice that it is considering a Change of Control 
                 and in the event of a private sale shall grant Novell 
                 reasonable opportunity to participate in the bidding process.

    10.4  INJUNCTIVE RELIEF.  Novell and BEA each hereby
          affirmatively represents that such party understands and acknowledges
          that the other party has a legitimate business purpose in requiring
          such party to abide by the restrictive covenants contained in this
          Section 10, and acknowledges that the restrictions contained herein
          are reasonable given the fact that failure to comply with such
          restrictions could result in competition with the TUXEDO Software
          that would severely injure the other party, and that monetary damages
          would be difficult if not impossible to ascertain.  In light of the
          foregoing and the consideration given by each party under this
          Agreement, each of Novell and BEA specifically agrees that in the
          event such party violates any of the provisions of this Section 10,
          irreparable harm shall be presumed and the other party shall be
          entitled to an immediate injunction from any court of competent
          jurisdiction, without the requirement of posting any bond in
          connection with temporary or interlocutory injunctive relief, to the
          extent permitted by law.

11   OWNERSHIP.

     11.1 CORE CODE AND CORE MODIFICATIONS.  Novell shall retain all
          right, title and interest in and to the Core Code, including all
          intellectual property rights thereto and the methods and concepts
          contained in the Core Code, subject to the rights and licenses
          granted to BEA hereunder.  Novell shall also hold, retain or be
          granted title to all Core Code and Core Modifications made to any
          TUXEDO Software created by either BEA or Novell during the Initial
          Term.  Core Modifications developed or created by BEA, including
          modifications to any version of the TUXEDO Software during the
          Initial Term shall be deemed works made for hire and licensed by
          Novell to BEA pursuant to the terms of this Agreement.  Should any
          Core Modifications not be considered a work made for hire, BEA agrees
          to execute all necessary documents to transfer title to the Core
          Modifications to Novell and to cooperate in the copyright
          registration of those Core Modifications on behalf of Novell.  Title
          to all applicable rights and patents, copyrights and trade secrets in
          such Core Modifications shall remain in Novell, subject to the
          purchase option granted to BEA under Section 14.2 below.  Upon
          Novell's request, BEA agrees to provide Novell a copy of each Core
          Modification developed or created by BEA based upon or incorporating
          the Core Code provided by Novell.  In any event, however, BEA shall
          provide a copy of such Core Modifications every six months from the
          Closing Date.  If BEA exercises the option to purchase a perpetual
          license under Section 14.2 below, BEA's  license in the Core Code
          shall become perpetual and BEA shall receive a transfer of ownership
          of all Core Modifications developed by BEA during the Initial Term,
          and shall own all right, title and interest in and to all Core
          Modifications developed by BEA during the Perpetual License Term (as
          defined in Section 14.2).  The foregoing shall apply to all Core
          Modifications including those made by BEA's subsidiaries, affiliates
          and/or contractors.


                                 PAGE 15
<PAGE>

     11.2 ADD-ONS.  Unless the parties expressly agree in writing to
          transfer ownership rights, Novell shall own all right, title and
          interest in and to all Add-ons developed or created by Novell during
          the Initial Term and thereafter, and BEA shall own all right, title
          and interest in and to all Add-Ons developed or created by BEA during
          the Initial Term and thereafter.  In the event Novell desires to
          license from BEA any Add-ons owned by BEA, the parties agree to
          negotiate in good faith with respect to the terms and conditions of
          such licenses.

     11.3 DOCUMENTATION.  Each party shall own the Documentation for such
          portions of the TUXEDO Software as are owned by it.  In the event of
          a transfer of ownership to any portion of the TUXEDO Software between
          the parties, ownership of Documentation shall follow ownership of
          such technology.

     11.4 COPYRIGHT NOTICE.  Any product distributed by BEA which contains
          any portion of code licensed from Novell hereunder shall contain the
          following notice in the product itself, on the media label and in the
          Documentation therefor: "Portions of this software -C- 1995 Novell,
          Inc.  All Rights Reserved.  Distributed under license by BEA Systems,
          Inc."

     11.5 RESIDUALS.  All rights of Novell not explicitly granted by
          Novell under this Agreement shall remain solely and exclusively in
          Novell.  To the extent that ownership of the Core Code and Core
          Modifications are  not deemed, as a matter of law, to be the sole and
          exclusive property of Novell, BEA hereby assigns and Novell hereby
          receives all right, title and interest therein, and agrees to execute
          at Novell's request subsequent documents as further evidence of this
          assignment.

12   TRADEMARK LICENSE.  During the Initial Term, the following terms and
     conditions shall apply to Novell's license to BEA of the Mark.  The
     parties acknowledge that, in the event BEA exercises its option under
     Section 14.2 to purchase the Mark at the end of the Initial Term, the
     terms and conditions of the license in this Section 0 shall be terminated
     at the time of purchase and shall have no further force or effect.

     12.1 LICENSE.  Conditional upon BEA's compliance with this Section 0,
          Novell hereby grants to BEA, during the Initial Term, an exclusive
          (as described below), world-wide, non-transferable license to use the
          Mark in connection with BEA's marketing, distribution and
          sublicensing of the TUXEDO Software.  "Exclusive" shall mean that
          Novell shall not license any other third party to use the Mark
          (subject, however, to licenses existing as of the Closing Date listed
          on Exhibit E, in its final form as delivered by Novell at Closing),
          and that Novell shall not itself use the Mark except in connection
          with the marketing, distribution, license or sale of TUXEDO Software
          pursuant to Section 5.2.

     12.2 NOTICE REQUIREMENTS.  The initial or most prominent use of the
          Mark in any products, packaging, written advertisements and other
          promotional materials shall include the trademark symbol -Registered
          Trademark- (i.e., "TUXEDO-Registered Trademark-"), and all such
          materials shall also include the following attribution notice:
          "TUXEDO is a registered trademark of Novell, Inc. in the United
          States and other countries."


                                 PAGE 16
<PAGE>

     12.3 RESERVATION OF RIGHTS AND GOODWILL.  Novell retains all rights
          in and to the Mark not expressly conveyed to BEA by this Section 0.
          BEA acknowledges that all goodwill which accrues in use of the Mark
          by BEA shall exclusively inure to the benefit of, and belong to,
          Novell.  BEA has no rights of any kind whatsoever with respect to the
          Mark licensed under this Agreement except to the extent of the
          license granted in Section 0 and the option to purchase the Mark
          granted in Section 14.2.

     12.4 NO REGISTRATION BY BEA.

          12.4.1 REPRESENTATION.  BEA represents that there is no 
                 registration or application for any trademark and/or service 
                 mark which is the same as, or confusingly similar to, the 
                 Mark, with regard to any "computer software products and/or 
                 services for networking computers or providing data 
                 communications" in any class and in any and all countries of 
                 the world, which is made by, on behalf and/or in the name of 
                 BEA.

          12.4.2 PROSPECTIVE PROHIBITION.  BEA further agrees to refrain from 
                 filing any new trademark and/or service mark application(s) 
                 with regard to any specification for "computers and computer 
                 software products and/or services for networking computers 
                 or providing data communications" in any class and in any 
                 country, for any trademark and/or service mark which is 
                 confusingly similar to the Mark, without the prior written 
                 consent of Novell.

          12.4.3 USE OF MARK IN FOREIGN JURISDICTIONS.  BEA shall give Novell 
                 at least ninety (90) days prior written notice of BEA's 
                 intent to use the Mark in any country other than the U.S. 
                 and other countries in which Novell has made substantial use 
                 of the Mark.   If after receiving such notice Novell 
                 determines that registration of the Mark or filing or 
                 recording of a license or a registered user agreement is 
                 required or advisable in connection with such proposed use, 
                 the parties shall cooperate in preparing and executing all 
                 documents necessary with respect thereto.  Registration of 
                 the Mark shall be in Novell's name; BEA shall pay all  the 
                 expense of any such registration, filing or recording.

          12.4.4 SUBSIDIARIES & AFFILIATES.  In the event Novell discovers 
                 that any person, employee, officer, director, agent, servant 
                 or juristic entity, which is controlled by, or under common 
                 control of, BEA, has filed for, or obtained a registration 
                 of, or is otherwise using any trademark which is confusingly 
                 similar to the Mark, Novell shall provide written notice of 
                 such to BEA.  Commencing upon receipt of such notice, BEA 
                 agrees to exercise best efforts to cause such person or 
                 entity to assign to, or otherwise provide Novell with, an 
                 exclusive license for the Mark.

          12.4.5 RESELLERS & LICENSEES.  BEA agrees to exercise commercially 
                 reasonable efforts to incorporate into each agreement with 
                 its resellers and licensees under which it sublicenses or 
                 sells TUXEDO Software provisions consistent with the 
                 applicable 

                                 PAGE 17
<PAGE>

                 provisions of this Section 0, or to otherwise prevent 
                 them from using marks or filing for registrations that
                 are prohibited by this Section 12.4.

          12.4.6 CONFUSING SIMILARITY.  For purposes of this Section 0, 
                 whether a mark is "confusingly similar" shall be determined 
                 in accordance with the laws of the jurisdiction in which the 
                 question arises.

          12.4.7 SURVIVABILITY.  The provisions of this Section 0, as they 
                 apply to BEA, shall survive any termination or expiration of 
                 this Agreement for a period of one (1) year after all of 
                 BEA's obligations under this Agreement are fulfilled, except 
                 in the event of BEA's purchase of the Mark.

     12.5 PROTECTION OF RIGHTS.  BEA shall assist Novell, at Novell's
          expense and to the extent reasonably necessary, to protect or to
          obtain protection for any of Novell's rights to the Mark.  Novell, if
          it so desires, may commence or prosecute any applications to register
          the Mark, in the name of Novell, for the Mark throughout the world.
          BEA shall promptly notify Novell in writing of any known or suspected
          abuses of the Mark.  Novell shall have the sole right to determine
          whether or not any action shall be taken on account of such uses by
          others.  BEA shall not institute any suit or take any action on
          account of such use by others except with Novell's prior written
          consent, which shall not be unreasonably withheld..

     12.6 INDEMNIFICATION BY BEA.  BEA hereby agrees to indemnify and hold
          Novell harmless against any loss, liability, damage, cost or expense
          (including reasonable legal fees) arising out of any claims or suits,
          whatever their nature and however arising, which may be brought or
          made against Novell (i) by reason of BEA's material breach of this
          Section 0 and/or (ii) arising out of the use by BEA of the Mark in
          any manner whatsoever except in the form expressly licensed
          hereunder.  In the event Novell seeks indemnification under this
          Section 0, it shall immediately notify BEA, in writing, of any claim
          or proceeding brought against it for which it seeks indemnification
          hereunder.  BEA shall have the sole control of the defense of the
          claim or proceeding and all negotiations for its settlement or
          compromise.  In no event may BEA enter into any third party
          agreements which would in any manner whatsoever affect the rights of,
          or bind, Novell in any manner to the third party, without the prior
          written consent of Novell.

     12.7 INDEMNIFICATION BY NOVELL.  Novell hereby agrees to indemnify
          and hold BEA harmless against any loss, liability, damage, cost or
          expense (including reasonable legal fees) arising out of any third
          party claims or suits which may be brought or made against BEA
          arising out of the use by BEA of the Mark in the form expressly
          licensed hereunder, which assert that BEA's use of the Mark violates
          such party's  trademark rights in the U.S. or in any other country in
          which Novell has made substantial use of the Mark.  In the event BEA
          seeks indemnification under this Section 0, it shall immediately
          notify Novell, in writing, of any claim or proceeding brought against
          it for which it seeks indemnification hereunder.  In no event may
          Novell enter into any third party agreements which would in any
          manner whatsoever affect the rights of, or bind, BEA in any manner to
          the third party, without the 


                                 PAGE 18
<PAGE>

          prior written consent of BEA.  Novell
          shall have the sole control of the defense of the claim or proceeding
          and all negotiations for its settlement or compromise. Novell
          reserves the right to replace or modify the Mark in a particular
          country at any time should use of the Mark become, or in Novell's
          opinion be likely to become, the subject of an allegation of
          infringement after Novell has demonstrated that it has made
          commercially reasonable efforts to resolve the dispute.  Novell will
          assist BEA in an orderly transition of the Mark to a new mark in the
          case of such infringement problems.

13   CONSIDERATION.

     13.1 PAYMENTS FOR INITIAL TERM.  During the Initial Term, in
          consideration of the licenses and rights granted by Novell to BEA
          herein for the Initial Term, BEA agrees to pay to Novell the
          following amounts:


          For Year 1 of the Initial Term:    $12 million ($3 million per
                                             quarter)
          For Year 2 of the Initial Term:    $21 million ($5.25 million per
                                             quarter)
          For Year 3 of the Initial Term:    $33 million ($8.25 million per
                                             quarter)

          Such amounts shall be payable to Novell on a quarterly basis,
          with the first payment due and payable March 31, 1996 and subsequent
          payments due at the end of each calendar quarter thereafter.  BEA
          shall have the right to defer payment of the initial two (2)
          quarterly payments required hereunder until the due date for payment
          of the third quarterly payment, and pay all three (3) such payments
          to Novell at the same time, together with interest at an annual
          percentage rate of 0% (zero percent) on the initial two (2) payments.
          BEA shall have the right to make prepayment of any of the payments
          specified in this Section 13.1, due within the following twelve
          months, less a discount rate equal to an annual rate of 8%.

     13.2 CONSIDERATION FOR TRANSFERRED ASSETS.  BEA agrees that the
          following amounts from the payments of Section 13.1 will be allocated
          to the transfer of the Transferred  Assets:

          For that certain equipment, furnishings and other personal
          property previously used by Novell's TUXEDO division as listed in
          Exhibit D: A fair value to be determined prior to Closing; and

          For all of Novell's shares of stock in USL Mexico, its fair
          value to be determined prior to Closing;  and

          For all of Novell's shares of stock in USL SA, its fair value to
          be determined prior to Closing.

     13.3 PAYMENTS & TAXES.  All payments required under this Agreement to
          Novell shall be in U.S. dollars and shall be exclusive of any
          federal, state, municipal or other government taxes, duties, excises
          or tariffs now or hereafter imposed on the production, storage, sale,
          transportation, import or export, or use of TUXEDO Software or
          Documentation, but 


                                 PAGE 19
<PAGE>

          excluding any taxes or fees imposed on Novell's
          net income.  Any taxes, duties, excises, tariffs, fees, or levies
          imposed on amounts paid hereunder or against this Agreement, except
          for taxes or fees based on Novell's net income, shall be the
          responsibility of BEA, and if rightfully paid or incurred by Novell,
          shall be promptly reimbursed to Novell by BEA upon receipt of an
          invoice from Novell.  BEA shall pay and promptly discharge when due
          the entire amount of any and all sales and use tax ("Sales Tax")
          imposed or levied by reason of the sale of the Transferred Assets to
          BEA.  The parties shall cooperate with each other to the extent
          reasonably required and legally permitted to minimize any such Sales
          Tax.

     13.4 GUARANTY.  All financial obligations of BEA during the Initial
          Term shall be guarantied by Warburg, Pincus pursuant to the form of
          Guaranty attached hereto as Exhibit  G.  The payment under Section
          14.2 below is not to be deemed a financial obligation of BEA, unless
          and until BEA gives Novell written notice that it is exercising the
          option described in Section 14.2.  In the event of a public offering
          of BEA stock in which BEA obtains at least $50 million in equity
          investments, provided that BEA creates and maintains an interest-
          bearing escrow account holding at least fifty percent (50%) of the
          amount of outstanding financial obligations of BEA during the Initial
          Term, Novell agrees to terminate the Guaranty and release Warburg,
          Pincus from its obligations thereunder, effective at the time BEA
          delivers to Novell reasonably satisfactory evidence that such minimum
          funds have been obtained from a public offering and the escrow
          account has been formed and fully funded.  Interest earned on the
          escrow amounts shall be available for use in satisfying obligations
          under this Agreement.

14   TERM; OPTION.  The initial term of this Agreement (the "Initial Term")
     shall be three (3) years from the Closing Date.  The Initial Term may be
     extended only upon the mutual written agreement of the parties, upon such
     terms and conditions as may be agreed at that time (any such extensions
     shall be considered part of the Initial Term for purposes of this
     Agreement, unless otherwise expressly stated in writing).  At the end of
     the Initial Term, BEA shall have the following options:

     14.1 Terminate this Agreement, including all technology and
          trademark licenses granted herein, and cease all distribution of the
          TUXEDO Software under this Agreement; provided, however, that BEA
          shall retain its rights in Add-ons developed by it during the Initial
          Term or otherwise owned by BEA, and provided further that all then-
          existing licenses to the TUXEDO Software shall survive such
          termination.

     14.2 Make perpetual, fully paid up, and irrevocable BEA's
          exclusive worldwide source code license to the TUXEDO Software as
          originally provided hereunder by Novell to BEA, including, subject to
          Novell's rights described in Section 5 above and in this Section
          14.2, an exclusive license under all applicable copyrights, patents,
          and other intellectual property rights thereto, and to purchase
          Novell's entire right, title and interest in and to the Mark and to
          the Core Modifications created by BEA during the Initial Term, for a
          one-time payment of  $25 million, to be paid no later than thirty
          (30) days prior to the end of the Initial Term. The term of such
          perpetual license (the "Perpetual License Term") shall begin
          immediately upon the end of the Initial Term.  In the event BEA
          exercises this option, effective on the first day of the Perpetual
          License Term, (i) Novell transfers to BEA all its right, title and
          interest in and to the Core Modifications that were created by BEA
          during the Initial Term, 


                                 PAGE 20
<PAGE>

          subject to a perpetual, royalty-free, irrevocable, worldwide source 
          code and patent license back to Novell to use and sublicense Core 
          Code, patents, and such Core Modifications for the permitted 
          purposes described in Section 5 above; (ii) BEA shall own all 
          right, title and interest in and to all future Derivative Works 
          of the TUXEDO Software, including Core Modifications, that will 
          be created by BEA during the Perpetual License Term; (iii) Novell 
          transfers to BEA all its right, title and interest in and to the 
          Mark and associated goodwill, (iv) Novell transfers Novell's work 
          in progress on its IBM main frame connectivity transaction 
          processing solutions, (v) BEA's obligations under Sections 6, 7, 
          8, 10 (except for the first sentence of Section 10.2), 12, 13, 16, 
          25.3, and 25.11 shall terminate, and (vi) this Agreement shall 
          not thereafter terminate or expire.  Rights granted pursuant 
          to this Section are subject to rights granted by Novell to third 
          parties during any period during which BEA's license was non-
          exclusive as contemplated in Section 8.2.

BEA shall notify Novell in writing, at least twelve (12) months prior to the
end of the Initial Term, of the option BEA elects to take at the end of the
Initial Term.  If notice is not timely received, this Agreement shall terminate
at the end of the Initial Term, as described in Section 14.1.

15   DELIVERY & DELIVERABLES.  Novell shall ship the deliverables identified in
     Exhibit A within ten business days after the Closing Date of this
     Agreement.

16   EMPLOYEES.

     16.1 IDENTIFICATION.  BEA agrees to offer employment to those Novell
          employees identified in Exhibit H, which shall be all employees of
          Novell dedicated to the development and marketing of the TUXEDO
          Software, as well as the Novell employees who provide full-time
          consulting with respect to the TUXEDO Software, excluding up to four
          (4) employees whom Novell may designate by name that Novell wishes to
          retain.  Those employees identified will receive offers for
          employment at the rate of pay set forth in a written offer to such
          employees from BEA, to be delivered by BEA prior to the Closing Date,
          and contingent upon the Closing.  BEA shall conduct mutually
          agreeable interviews of such employees and shall make offers
          contingent upon Closing to such employees prior to the Closing Date.
          Offers shall have been subject to acceptance or rejection prior to
          the Closing Date.  Those employees who have accepted conditional
          offers from BEA prior to the Closing Date shall be referred to herein
          as "Transferred Employees."

     16.2 BEA'S EXPECTED COMPENSATION/BENEFIT PACKAGE. Prior to the
          execution of this Agreement, BEA has provided to Novell confidential
          information regarding the proposed compensation and benefit offerings
          for each Transferred Employee, so Novell could independently evaluate
          BEA's compensation and benefit offerings for "comparability" with
          Novell's compensation and benefits.  BEA agrees that it shall offer
          to such employees the same salary they received from Novell, as well
          as comparable employee benefits.  Additionally, BEA represents that
          it has no current intention to require Transferred Employees to
          relocate outside of the greater Florham Park, New Jersey area.

     16.3 TERMINATION OF EMPLOYMENT WITH NOVELL.  On the Closing Date,
          each of the Transferred Employees will cease their employment with
          Novell. Except as otherwise set forth herein, or under the provisions
          of any applicable Novell employee benefit plan or except as 


                                 PAGE 21
<PAGE>

          otherwise required by applicable law, all Novell benefits for the 
          Transferred Employees, including, but not limited to, health, 
          vision, and dental, shall cease upon the last day of the calendar 
          month in which the Closing occurs. Novell shall pursue procedures 
          with respect to benefits of the Transferred Employees, including, 
          but not limited to, any stock options and stock purchase plan(s), 
          in accordance with Novell's customary employee termination 
          procedures.

     16.4 HIRE BY BEA. Immediately after execution of this Agreement, BEA
          will offer to employ all of the Transferred Employees for a period of
          not less than one (1) year from the Closing Date at no less than the
          rate of pay stated in the written offer given by BEA to the
          Transferred Employees described in Section 16.2 above; provided,
          however, that BEA may terminate any Transferred Employee for good
          cause (as defined by applicable state law in the state in which the
          Transferred Employee is located).  With the exception of the above
          "Transferred Employees", BEA agrees that it will not solicit or
          recruit any other Novell employees from Novell's TUXEDO division for
          a period of one year after the Closing.

     16.5 AT&T PENSION OBLIGATION. The parties acknowledge that Novell
          incurred certain accounting and reporting obligations relating to
          specific employees covered by AT&T pension plans. Should BEA be
          considered a "successor employer" or similar designation under the
          relevant agreement between Novell and AT&T, BEA agrees to report
          compensation levels for any Transferred Employees as required by the
          AT&T pension plans.

17   ERROR CORRECTION AND CUSTOMER SUPPORT.

     17.1 CUSTOMER SUPPORT.  Effective as of the Closing Date, BEA shall
          assume responsibility for providing technical support (including "hot
          line" support) to all current TUXEDO customers and accounts of
          Novell. With respect to customers who may purchase TUXEDO based
          products in the future from Novell (e.g., NetWare Transactions,
          TransactionLink, etc.), Novell shall have an option to outsource
          customer support to BEA for a reasonable support fee paid to BEA.  To
          ensure that all current Novell TUXEDO customers have a smooth
          transition to BEA support, Novell agrees to continue for 90 days
          after the Closing Date, the "hot line" and "first line" support that
          Novell currently provides to its TUXEDO customers from its central
          support center in Provo.  BEA and Novell will collaborate on
          arrangements for this transition process; BEA shall not be obligated
          to pay for any resulting costs. Novell will provide BEA at no charge
          detailed information concerning customer names, coverage,
          eligibility, maintenance history and technical data concerning its
          experience and processes related to TUXEDO support.

     17.2 END USERS AND RESELLERS.  Under this Agreement, Novell shall
          have no obligation to provide support to BEA's customers, including
          without limitation, BEA's distributors, sub-distributors, dealers,
          resellers and/or end users.   Notwithstanding, Novell may receive
          support calls which involve BEA's versions of TUXEDO Software.  To
          facilitate Novell's ability to provide timely response to customers
          where versions of TUXEDO Software provided by BEA are involved, BEA
          agrees to provide Novell with two (2) copies of each version made
          generally available by BEA.



                                 PAGE 22
<PAGE>
     17.3 SUPPORT TO NOVELL. After the Closing Date, upon a mutually
          agreeable schedule, BEA shall host up to four (4) Novell
          developers/engineers at BEA's facilities for up to three (3) months
          worth of time, in order to train them with respect to the TUXEDO
          Software.  All salaries and expenses for the developers/engineers
          shall be borne by Novell.  Additionally, the parties acknowledge that
          due to BEA's ongoing modifications to the TUXEDO Software and
          Novell's rights to utilize such modifications, Novell's development
          staff will require ongoing technical support from BEA from time to
          time as such modifications are made, and BEA agrees to provide a
          reasonable amount of such technical support to Novell during the
          Initial Term free of charge.

18   SALE OF TRANSFERRED ASSETS; ASSUMPTION OF ASSUMED CONTRACTS.

     18.1 SALE OF TRANSFERRED ASSETS.  Effective upon Closing, Novell
          hereby sells, grants, transfers, conveys, assigns and delivers to BEA
          all of Novell's right, title and interest in and to the Transferred
          Assets, and as evidence thereof shall execute and deliver to BEA the
          Bill of Sale and Assignment of Assets in substantially the form of
          Exhibit I, and BEA hereby accepts delivery thereof.  The parties
          acknowledge that accounts receivable held by Novell remain Novell's
          assets and are not transferred as part of the Transferred Assets.  To
          assure a smooth transition during the first nine months, the parties
          agree to cooperate in good faith to determine the appropriate
          allocation for the distribution of any payments received for the sale
          or license to third parties of TUXEDO Software.

     18.2 ASSUMPTION OF ASSUMED CONTRACTS.  Effective upon Closing, Novell
          hereby assigns to BEA all of Novell's rights and obligations under
          the Assumed Contracts, and BEA hereby accepts such assignment and
          assumes all responsibilities and obligations of the Assumed Contracts
          as part of the consideration for this Agreement.  Should BEA not
          exercise its option pursuant to Section 14.2 or upon other
          termination of this Agreement, BEA agrees to reassign to Novell the
          Assumed Contracts and any BEA contracts which are based on the rights
          granted under this Agreement.

19   NOVELL'S REPRESENTATIONS AND WARRANTIES.  Novell hereby warrants,
     represents and covenants to BEA as follows:

     19.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS.  Novell is a
          corporation duly organized and existing under, and by virtue of, the
          laws of the state of Delaware and is in good standing under such
          laws. Novell has the requisite corporate power to own and operate its
          properties and assets and to carry on its business as currently
          conducted and as proposed to be conducted. Novell is duly qualified
          to transact business and is in good standing in each jurisdiction in
          which the failure to so qualify would have a material adverse effect
          on its business or properties.

     19.2 CORPORATE POWER. Novell has all requisite corporate power to
          execute and deliver this Agreement and all agreements to be executed
          and delivered by Novell pursuant to the terms hereof and to carry out
          and perform its obligations under the terms of this Agreement and
          such other agreements.

                                   PAGE 23
<PAGE>

     19.3 AUTHORIZATION. All corporate action on the part of Novell, its
          directors and its stockholders necessary for the authorization,
          execution, delivery and performance of this Agreement and any other
          agreements contemplated hereby has been taken. This Agreement and any
          other agreements contemplated hereby, when executed and delivered by
          Novell, will constitute valid and binding obligations of Novell
          enforceable in accordance with their respective terms.

     19.4 COMPLIANCE WITH OTHER INSTRUMENTS, NO CONFLICTS, ETC. The
          execution, delivery and performance of and compliance with this
          Agreement and all documents executed in connection herewith
          ("Incorporated Documents") will not result in any violation of, or
          conflict with, or constitute a default under Novell's Certificate of
          Incorporation or Bylaws, or under any material agreement to which
          Novell is a party, or result in the creation of, any mortgage,
          pledge, lien, encumbrance or charge upon any of the properties or
          assets of Novell. No consent of any person not a party to this
          Agreement and no consent of any governmental authority is required to
          be obtained on the part of Novell to permit the consummation of the
          transactions contemplated by this Agreement (including without
          limitation the transfer to BEA of all right, title and interest in
          and to the Transferred Assets). Novell is not in violation of any
          term of its Certificate of Incorporation or Bylaws, or in any
          material respect of any term or provision of any mortgage,
          indebtedness, indenture, contract, agreement, instrument, judgment or
          decree, order, statute, rule or regulation applicable to Novell if it
          could have an adverse impact on the transactions contemplated by this
          Agreement.

     19.5 LITIGATION, ETC. There are no actions, suits, proceedings or
          investigations pending against Novell or its officers or properties
          before any court, arbitrator or governmental agency (or, to the best
          of Novell's knowledge, is there any threat thereof) that questions
          the validity of this Agreement and/or any of the Incorporated
          Documents or any action taken or to be taken in connection herewith
          or therewith. Novell is not a party to or specifically by name
          subject to the provisions of any order, writ, injunction, judgment or
          decree of any court or government agency or instrumentality that
          questions the validity of this Agreement and/or any of the
          Incorporated Documents or any action taken or to be taken in
          connection herewith or therewith. There is no action, suit,
          proceeding or investigation by Novell currently pending or that
          Novell currently intends to initiate that questions the validity of
          this Agreement and/or any of the Incorporated Documents or any action
          taken or to be taken in connection herewith or therewith.

     19.6 OWNERSHIP OF ASSETS. Novell owns all of the Transferred Assets
          free and clear of all liens, security interests and other
          encumbrances, excepting Assumed Contracts and any other liabilities
          being assumed by BEA under this Agreement or as otherwise stated in
          this Agreement (including the Exhibits attached hereto), and Novell
          can transfer the same to BEA without limitation of any kind, except
          as otherwise provided in this Agreement.

     19.7 DISCLOSURE. The representations and warranties of Novell
          contained in this Agreement, do not contain any untrue statement of a
          material fact or omit to state a material fact necessary in order to
          make the statements contained herein or therein not misleading in
          light of the circumstances under which they were made. Novell has no
          present intention to transfer this Agreement or any of its rights or
          obligations hereunder or under the Incorporated 

                                   PAGE 24
<PAGE>


          Documents or any of the assets acquired hereby to any third 
          party, except in the ordinary course of business.
          
     19.8 CUSTOMER TRANSITION. Novell will use commercially reasonable
          efforts to implement a smooth transition of operations from Novell to
          the end that all TUXEDO Software distributors and customers will
          experience as little disruption and delay in service, supply and
          support as is reasonably practicable.

     19.9 NOTICE OF MATERIAL CHANGE. Novell agrees to give BEA prompt
          written notice of any material change which occurs prior to the
          Closing in any of the information contained in the representations
          and warranties made by Novell in this Agreement and/or the Exhibits
          attached hereto.

    19.10 OWNERSHIP OF TUXEDO SOFTWARE.  Novell owns the TUXEDO
          Software free and clear of all liens, security interests and other
          encumbrances, except for non-exclusive licenses.  Novell can grant to
          Novell the exclusive right and license to distribute the TUXEDO
          Software throughout the world that is subject only to the existing
          non-exclusive licenses being assigned to BEA at the Closing as
          Assumed Contracts. Novell is not obligated to pay any license fees or
          other payments to any party in connection with the licensing of the
          TUXEDO Software.  The sale, distribution, reproduction and use of the
          TUXEDO Software does not, to the best of Novell's knowledge, infringe
          any patent, copyright, trade secret, trademark or other proprietary
          rights of any third party, nor has Novell received any claim of such
          infringement.

    19.11 ASSIGNMENT OF ASSUMED CONTRACTS.  Novell has listed as
          Assumed Contracts in Exhibit C, in its final form as delivered by
          Novell to BEA on or before the Closing Date, all existing licenses,
          service contracts (including documentation), independent contractor
          agreements, and other agreements between Novell and another party
          relating to TUXEDO Software.  The aggregate yearly revenue received
          from the Assumed Contracts by Novell has been accurately represented
          in the financial information provided by Novell to BEA, to the best
          of Novell's knowledge.  All of the Assumed Contracts are in full
          force and effect unless otherwise specified, and Novell is not
          currently in breach of any of the terms of the Assumed Contracts.
          Except as specifically identified in Exhibit C, Novell can assign to
          BEA all of the Assumed Contracts, and after Closing, BEA shall have
          been assigned all rights of Novell under the Assumed Contracts.

    19.12 LIMITATION OF WARRANTY.  Except as otherwise provided in
          this Agreement, BEA acknowledges that the TUXEDO Software and
          Transferred Assets are provided to BEA "as is" and without any
          warranty of any kind.  EXCEPT AS OTHERWISE SET FORTH IN THIS
          AGREEMENT, NOVELL EXPRESSLY DISCLAIMS ALL WARRANTIES WITH RESPECT TO
          THE TUXEDO SOFTWARE AND THE TRANSFERRED ASSETS, INCLUDING, BUT NOT
          LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE AND
          FITNESS FOR A PARTICULAR PURPOSE.

                                   PAGE 25
<PAGE>



20   BEA REPRESENTATIONS AND WARRANTIES.  BEA hereby warrants, represents and
     covenants to Novell as follows:

     20.1 ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. BEA is a
          corporation duly organized and existing under, and by virtue of, the
          laws of the state of Delaware and is in good standing under such
          laws. BEA has the requisite corporate power to own and operate its
          properties and assets and to carry on its business as currently
          conducted and as proposed to be conducted. BEA is duly qualified to
          transact business and is in good standing in each jurisdiction in
          which the failure to so qualify would have a material adverse effect
          on its business or properties.

     20.2 CORPORATE POWER. BEA has all requisite corporate power to
          execute and deliver this Agreement and all Incorporated Documents and
          to carry out and perform its obligations under the terms of this
          Agreement and such other documents.

     20.3 AUTHORIZATION. All corporate action on the part of BEA, its
          directors and its stockholders necessary for the authorization,
          execution, delivery and performance of this Agreement and any other
          agreements contemplated hereby has been taken. This Agreement and the
          Incorporated Documents, when executed and delivered by BEA, will
          constitute valid and binding obligations of BEA enforceable in accor-
          dance with their respective terms.

     20.4 COMPLIANCE WITH OTHER INSTRUMENTS, NO CONFLICTS, ETC. The
          execution, delivery and performance of and compliance with this
          Agreement and the Incorporated Documents will not result in any
          violation of, or conflict with, or constitute a default under BEA's
          Articles of Incorporation or Bylaws, or under any material agreement
          to which BEA is a party, or result in the creation of, any mortgage,
          pledge, lien, encumbrance or charge upon any of the properties or
          assets of BEA. No consent of any person not a party to this Agreement
          and no consent of any governmental authority is required to be
          obtained on the part of BEA to permit the consummation of the
          transactions contemplated by this Agreement (including without
          limitation the transfer to BEA of all right, title and interest in
          and to the Transferred Assets). BEA is not in violation of any term
          of its Articles of Incorporation or Bylaws, or in any material
          respect of any term or provision of any mortgage, indebtedness,
          indenture, contract, agreement, instrument, judgment or decree,
          order, statute, rule or regulation applicable to BEA if it could have
          an adverse impact on the transactions contemplated by this Agreement.

     20.5 LITIGATION, ETC. There are no actions, suits, proceedings or
          investigations pending against BEA or its officers or properties
          before any court, arbitrator or governmental agency (or, to the best
          of BEA's knowledge, is there any threat thereof) that questions the
          validity of this Agreement and/or any of the Incorporated Documents
          or any action taken or to be taken in connection herewith or
          therewith. BEA is not a party to or specifically by name subject to
          the provisions of any order, writ, injunction, judgment or decree of
          any court or government agency or instrumentality that questions the
          validity of this Agreement and/or any of the Incorporated Documents
          or any action taken or to be taken in connection herewith or
          therewith. There is no action, suit, proceeding or investigation by
          BEA currently pending or that BEA currently intends to initiate that
          questions the validity 

                                   PAGE 26
<PAGE>


          of this Agreement and/or any of the Incorporated Documents or 
          any action taken or to be taken in connection herewith or 
          therewith.

     20.6 DISCLOSURE. The representations and warranties of BEA contained
          in this Agreement, do not contain any untrue statement of a material
          fact or omit to state a material fact necessary in order to make the
          statements contained herein or therein not misleading in light of the
          circumstances under which they were made. BEA has no present
          intention to transfer this Agreement or any of its rights or
          obligations hereunder or under the Incorporated Documents or any of
          the assets acquired hereby to any third party, except in the ordinary
          course of business.

     20.7 CUSTOMER TRANSITION. BEA will use commercially reasonable
          efforts to implement a smooth transition of operations from Novell to
          the end that all TUXEDO Software distributors and customers will
          experience as little disruption and delay in service, supply and
          support as is reasonably practicable.

     20.8 NOTICE OF MATERIAL CHANGE. BEA agrees to give Novell prompt
          written notice of any material change which occurs prior to the
          Closing in any of the information contained in the representations
          and warranties made by BEA in this Agreement and/or the Exhibits
          attached hereto.

21   INTELLECTUAL PROPERTY INDEMNIFICATION

     21.1 INDEMNIFICATION BY NOVELL.  Novell agrees to indemnify, defend
          and hold BEA harmless from any and all damages, liabilities, costs
          and expenses incurred by BEA as a result of any claims, judgments or
          adjudication against BEA that TUXEDO Software or Novell Documentation
          infringes the copyright or trade secret or US patent  rights of any
          third party, provided:  (i) BEA shall promptly notify Novell in
          writing of the claim; and (ii) Novell shall have the sole control of
          the defense of the action and BEA provides Novell with full
          information and assistance for its defense, settlement and/or
          compromise.

     21.2 EXCLUSIONS.  Should any of the software provided by Novell under
          this Agreement, or the operation, marketing or distribution thereof
          in accordance with the rights granted in this Agreement, become, or
          in Novell's opinion be likely to become, the subject of infringement
          of any copyright or other intellectual property right of any third
          party, BEA shall permit Novell, at its option and expense, to either
          (i) procure for BEA the right to continue using such software, or
          (ii) replace or modify such software so that it becomes
          non-infringing, provided such replaced or modified software retains
          comparable functionality.  If neither of such options is commercially
          reasonable, in Novell's reasonable opinion, Novell may  terminate its
          obligations for indemnification to BEA under this Section 21.1 with
          respect to any such patent infringement upon written notice to BEA
          after Novell has made commercially reasonable efforts to obtain such
          rights or permission.  The parties agree that these aforementioned
          commercially reasonable efforts on part of Novell shall not exceed a
          cumulative total expenditure of $5,000,000 in Novell's efforts to
          secure the necessary rights.  Novell shall have no liability to BEA
          under any provision of this Agreement with respect to any claim of
          infringement which is based on a modification of the software by any
          person other than Novell, including works for hire created by BEA

                                   PAGE 27
<PAGE>


          pursuant to this Agreement, or the combination or utilization of
          software, equipment or devices not made or recommended by Novell
          pursuant to any specifications other than, or in addition to,
          Novell's specifications, where the claim could not have been based on
          the use of software, equipment or devices made or recommended by
          Novell.

     21.3 INDEMNIFICATION BY BEA.  BEA agrees to indemnify, defend and
          hold Novell harmless from any and all damages, liabilities, costs and
          expenses incurred by Novell as a result of any claims, judgments or
          adjudication against Novell that Derivative Works of the TUXEDO
          Software created by BEA (including Core Modifications and Add-ons) or
          BEA Documentation infringes the copyright or trade secret rights of
          any third party, provided:  (i) Novell shall promptly notify BEA in
          writing of the claim; and (ii) BEA shall have the sole control of the
          defense of the action and Novell provides BEA with full information
          and assistance for its defense, settlement and/or compromise.

     21.4 ENTIRE LIABILITY.  THE ABOVE STATES THE ENTIRE LIABILITY OF EACH
          PARTY WITH RESPECT TO INFRINGEMENT OF COPYRIGHTS, TRADEMARKS, PATENTS
          OR ANY OTHER FORM OF INTELLECTUAL PROPERTY BY ANY MATERIALS SUPPLIED
          BY SUCH PARTY UNDER THIS AGREEMENT.  BEA SPECIFICALLY ASSUMES ALL
          LIABILITY AND RISK WITH RESPECT TO ALL TUXEDO SOFTWARE DEVELOPED,
          LICENSED, OR SOLD BY IT, EXCEPT AS OTHERWISE SPECIFICALLY SET FORTH
          HEREIN.

22   CONFIDENTIAL INFORMATION.

     22.1 CONFIDENTIAL OBLIGATION.  From the date of receipt of
          Confidential Information and for a period of five (5) years from the
          destruction or return of Confidential Information, the Receiving
          Party agrees to use the same care and discretion, but no less than
          reasonable care and discretion, to avoid disclosure, publication or
          dissemination of Confidential Information it has received, as the
          Receiving Party employs for similar information of its own which it
          does not desire to publish, disclose or disseminate, except to those
          employees and/or permitted subcontractors of the Receiving Party who
          have a need to know in order to permit the Receiving Party to
          exercise the rights granted to it in Section 0 with respect to
          Confidential Information.  Following expiration of the underlying
          license grant in the Confidential Information, the Receiving Party
          agrees to destroy any and all Confidential Information received from
          the Disclosing Party.  Provided the Receiving Party has complied in
          all respects with this provision, no obligation of any kind shall be
          assumed by, or imposed upon the Receiving Party with respect to such
          Confidential Information after the time period specified above.

     22.2 EXTREMELY SENSITIVE INFORMATION.  A party receiving Extremely
          Sensitive Information agrees to take the following measures (in
          addition to the protective measures otherwise required for
          Confidential Information):

          22.2.1    Restrict access to the Extremely Sensitive
                    Information to only those employees and independent 
                    contractors (a) who require access as part of the Receiving 
                    Party's performance under this Agreement, (b) who have 
                    been notified of the confidential nature of the Extremely 
                    Sensitive Information, and (c) who do not constitute an 

                                   PAGE 28
<PAGE>



                    unreasonable risk of inadvertent disclosure of the 
                    Extremely Sensitive Information by developing or being 
                    in contact with developing products competitive with 
                    Disclosing Party's products;

          22.2.2    Maintain a written record of access to Extremely 
                    Sensitive Information; which, at a minimum, includes the 
                    name of each employee or independent contractor given 
                    access to Extremely Sensitive Information, the identity 
                    of the Extremely Sensitive Information, and a copy of the 
                    employee's or independent contractor's written 
                    confidentiality agreement covering the Extremely 
                    Sensitive Information.  The written confidentiality 
                    agreement must either name the Disclosing Party as a 
                    third-party beneficiary of the agreement or be subject to 
                    the Receiving Party's agreement to take prompt and 
                    vigorous action to enforce on behalf of and as requested 
                    by the Disclosing Party.  Access records may be kept 
                    automatically by means of an operating system log in 
                    audit trail facility. The Disclosing Party will be 
                    allowed to review and obtain copies of this record 
                    promptly upon its reasonable request; and,

          22.2.3    Promptly notify the Disclosing Party in writing of any 
                    circumstances which become known to the Receiving Party 
                    surrounding any possession, use, or knowledge of the 
                    Disclosing Party's Extremely Sensitive Information at any 
                    location or by any person or entity other than those 
                    authorized under this Agreement.

23   DEFAULT/TERMINATION

     23.1 DEFAULT.  In addition to any other rights or remedies available at 
          law or in equity, either party may terminate this Agreement upon 
          any of the following:
     
          23.1.1    The other party is in default of any material obligation 
                    hereunder and default continues for ninety (90) days 
                    following receipt of written notice.

          23.1.2    The other party is dissolved or attempts an unauthorized 
                    assignment of this Agreement or any of its rights under 
                    this Agreement.

          23.1.3    The other party is not paying its debts as the debts 
                    become due, becomes insolvent, files or has filed against 
                    it a petition under any Bankruptcy Law, proposes any 
                    dissolution, liquidation, composition, financial 
                    reorganization or recapitalization with creditors, makes 
                    an assignment or trust mortgage for the benefit of 
                    creditors, or if a receiver trustee, custodian or similar 
                    agent is appointed or takes possession of any property or 
                    business, to the extent termination is permitted by 
                    applicable law.

          In the event of a default by BEA pursuant to this Section,
          Novell shall be entitled to receive damages and payments from BEA in
          an amount not less than the payments required under Section 23.2
          below.

                                   PAGE 29
<PAGE>



     23.2 TERMINATION AT WILL BY BEA.  During the Initial Term, BEA
          may terminate this Agreement, with or without cause, at any time upon
          no less than six (6) months' prior written notice to Novell, subject
          to payment of the following amounts to Novell, on or before the date
          termination is effective:

          If the effective date of termination is before the first
          anniversary date of this Agreement:  $7 million

          If the effective date of termination is on or after the first
          anniversary date but before the second anniversary date of this
          Agreement:  $8 million

          If the effective date of termination is on or after the second
          anniversary date but before the third anniversary date of this
          Agreement:  $9 million

          The parties acknowledge and agree that the foregoing early
          termination amounts are not intended to be punitive in nature but are
          amounts reasonably calculated to cover Novell's costs and expenses in
          resuming the development, marketing, distribution and support of the
          TUXEDO Software which had been assumed by BEA under this Agreement.
          During the six (6) month period between the date notice of
          termination is given and the date such notice is effective, BEA shall
          remain liable to Novell for the full amount of payments otherwise
          required by this Agreement, in addition to the early termination
          payments set forth above, regardless of whether BEA continues
          developing or distributing TUXEDO Software during such period.
          Effective as of the date BEA gives notice of termination, (i) BEA
          shall no longer have any obligation to comply with Sections 8.1 and
          8.2 of this Agreement; and (ii) all exclusive rights and licenses
          granted to BEA in this Agreement shall become non-exclusive.

     23.3 EFFECT OF TERMINATION ON OBLIGATIONS.  Termination of this
          Agreement shall not affect any of BEA's pre-termination obligations
          to BEA customers.  Notwithstanding any expiration or termination of
          this Agreement, unless this Agreement is terminated due to a breach
          by BEA, (i) BEA and its Subsidiaries, using the Mark, may distribute
          a commercially reasonable number of copies of TUXEDO Software in
          stock or in order to fill orders placed by end users or resellers
          prior to the expiration or termination of this Agreement during the
          subsequent ninety (90) days after expiration, (ii) those copies of
          TUXEDO Software in possession of resellers may be distributed in
          accordance with the terms and conditions of this Agreement, and (iii)
          sublicenses granted pursuant to this Agreement shall not be revoked
          by the expiration or termination of this Agreement.  Except as
          specifically set forth above or in Section 4.1.6, all other licenses
          shall immediately cease upon termination or expiration.

                                   PAGE 30
<PAGE>



24   REMEDIES AND LIMITATION OF LIABILITY.  THE REMEDIES SET FORTH BELOW ARE
     EXCLUSIVE OF ALL OTHER REMEDIES THAT MAY BE AVAILABLE AT LAW OR IN EQUITY.
     NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO PARTY SHALL
     BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, INCIDENTAL, PUNITIVE OR
     CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) SUSTAINED OR INCURRED IN
     CONNECTION WITH THIS AGREEMENT AND THE PRODUCTS THAT ARE SUBJECT TO THIS
     AGREEMENT, REGARDLESS OF THE FORM OF ACTION AND WHETHER OR NOT SUCH
     DAMAGES ARE FORESEEABLE.

25   GENERAL PROVISIONS.

     25.1 NOTICE.  Unless otherwise agreed to by the parties, all notices
          required under this Agreement (except those relating to product
          pricing, changes and upgrades) shall be deemed effective when
          received and made in writing by either (i) registered mail, (ii)
          certified mail, return receipt requested, or (iii) overnight mail,
          addressed and sent to the attention of:

                                             
          Novell, Inc.                       BEA Systems, Inc.
          122 East 1700 South                2465 E. Bayshore Road
          Provo, Utah 84606                  Palo Alto, CA 94303
          Attn: Mark Epstein                 Attn: Edward W. Scott, Jr.

          and with a copy of non-technical notices to:

                                             
          Novell, Inc.                       Morrison & Foerster
          1555 N. Technology Way, A200       755 Page Mill Road
          Orem, Utah 84057                   Palo Alto, California 94304-1018
          Attn: General Counsel              Attn: Michael C. Phillips

          and, during the time the Guaranty is in effect, to:


          Warburg, Pincus Ventures L.P.
          466 Lexington Avenue
          New York, NY 10017
          Attn: Stewart Gross

     25.2 SUSPECTED INFRINGEMENT.  BEA agrees to promptly report to Novell
          of any infringement or potential infringement of Novell's
          intellectual property rights in TUXEDO Software by a third party.
          BEA also agrees to assist Novell in any reasonable way in
          investigating the infringement or potential infringement and/or in
          enforcing Novell's rights against infringing parties in exchange for
          payment by Novell of BEA's reasonable expenses.

     25.3 INTERNATIONAL DISTRIBUTION.  BEA agrees to distribute TUXEDO
          Software only in countries which provide reasonably adequate
          protection for Novell's proprietary rights through copyright, trade
          secret, patent, or other laws.  BEA shall be deemed to be in
          compliance 

                                   PAGE 31
<PAGE>


          with this Section in those countries where Novell distributes 
          (either directly or indirectly) the NetWare network operating 
          system.

     25.4 DISCLOSURES.   Each party agrees not to disclose the terms and
          conditions of this Agreement to any third party without the express
          written consent of the other party.  No party shall announce the
          existence of this Agreement without the prior consent of the other
          party, which shall not unreasonably be withheld.

          The parties acknowledge the importance of appropriate
          disclosures in positioning the partnership relationship between the
          companies to the distribution channel, the press, customers, and
          others. The parties agree that, for six months after the Closing
          Date, no press releases or other disclosures by company
          representatives shall conflict with the sample initial press release
          attached hereto as Exhibit J without the written consent of the other
          party. During the remainder of the Initial Term, all press releases
          and other disclosures by company representatives shall continue to
          portray the relationship between the parties as a partnership and
          strategic alliance.

     25.5 CONSTRUCTION.

          25.5.1    HEADINGS.  The headings of this Agreement are
                    provided for reference only and shall not be used as 
                    a guide to interpretation.

          25.5.2    ORDER OF PRECEDENCE.  In rendering performance under this 
                    Agreement, each party shall comply with all applicable 
                    provisions contained in each of the documents comprising 
                    this Agreement. In the event of inconsistency between or 
                    among the various documents, the following order of 
                    precedence shall govern:

                    25.5.2.1  This Agreement and its Exhibits; and
                         
                    25.5.2.2  Documents incorporated by reference;
                         

          25.5.3    SINGULAR, PLURAL AND GENDER.  When used in this 
                    Agreement, the singular includes the plural, the plural 
                    includes the singular and gender related pronouns include 
                    the feminine, masculine and neuter.

     25.6 GOVERNING LAW.  This Agreement shall be governed by and
          construed and enforced in accordance with the substantive laws of the
          State of Utah.  The parties agree that any action relating to this
          Agreement shall be instituted and prosecuted exclusively in the
          courts of competent jurisdiction of the State of Utah or the San
          Francisco Bay area of the State of California.

     25.7 FORCE MAJEURE.  If any party shall be prevented from performing
          any portion of this Agreement (except the payment of money) by causes
          beyond its control, including labor disputes, civil commotion, war,
          governmental regulations or controls, casualty, inability to obtain
          materials or services or acts of God, the defaulting party shall be
          excused from performance for the period of the delay and for a
          reasonable time thereafter.

                                   PAGE 32
<PAGE>


     25.8 SURVIVAL OF TERMS.  The provisions of this Agreement which by
          their nature extend beyond the expiration or termination of this
          Agreement, including, but not limited to, Sections 0, 0, 4.1.6, 0,
          13.3, 13.4, 19, 20, 21, 22, 0, 0 and 0 will survive and remain in
          effect until all obligations are satisfied.

     25.9 WAIVER.  No waiver of any right or remedy on one occasion by any
          party shall be deemed a waiver of the right or remedy on any other
          occasion.

    25.10 SUPERIOR AGREEMENT.  This Agreement, including all exhibits
          referenced herein, sets forth the entire agreement and understanding
          among the parties as to the subject matter and merges all prior
          discussions between Novell (or its predecessors in interest,
          including USL) and BEA or any of its Subsidiaries or affiliates with
          respect to this transaction but does not supersede any prior written
          agreements between any such parties. Neither party shall be bound by
          any conditions, definitions, warranties, understandings or
          representations with respect to the subject matter other than as
          expressly provided under this Agreement.  This Agreement may not be
          modified by usage of trade, course of dealing or otherwise.  This
          Agreement is subject to amendment or modification only by a writing
          duly signed by all parties.

    25.11 ASSIGNMENT.  Subject to the provisions of Section 10.3,
          neither party may assign this Agreement except in connection with a
          merger, consolidation, or sale of all or substantially all of the
          party's assets, or with the prior written consent of the other party,
          and except that BEA may assign any of its rights or obligations to
          its Subsidiaries subject to BEA remaining jointly liable to Novell
          for the obligations under this Agreement.  Any attempted assignment
          without written consent shall be null and void.  Where required, no
          party shall unreasonably withhold consent.

    25.12 TERMINATION OF LITIGATION.  BEA agrees to cause its
          subsidiary IMC to dismiss with prejudice its pending litigation
          against Novell and forever release Novell from any liability for such
          claims under the litigation.  BEA will cause IMC to execute all
          necessary documents and agrees to file such documents in the courts
          of relevant jurisdiction to effect the dismissal with prejudice of
          the pending litigation.  BEA and  its Subsidiaries agree to be bound
          by said dismissal with prejudice and release of Novell associated
          with the pending litigation against Novell by IMC.  BEA shall deliver
          at Closing the form Stipulation to Dismissal with Prejudice of the
          above-referenced litigation reasonably acceptable to Novell, which
          shall be executed by the parties and filed as promptly as possible
          following Closing.

    25.13 SEVERABILITY. If any term of this Agreement is held invalid
          or unenforceable by a court or authority of competent jurisdiction,
          such term shall be reduced or otherwise modified by such court or
          arbitrator to the minimum extent necessary to make it valid and
          enforceable.  If such term cannot be so modified, it shall be severed
          and the remaining terms of this Agreement shall be interpreted, to
          the extent possible, in such a way as to give maximum validity and
          enforceability to the terms of this Agreement as originally intended
          by the parties.

                                   PAGE 33
<PAGE>


    25.14 INDEPENDENT CONTRACTORS.  The parties to this Agreement are
          independent contractors and each agrees not to represent itself as an
          agent or legal representative of any other party.  Neither party has
          the authority to bind the other, to incur any liability or otherwise
          act on behalf of the other, or to direct the employees of the other.

    25.15 COMPLIANCE WITH LAWS.  Regardless of any disclosure made by
          BEA to Novell of an ultimate destination of the Program, BEA will not
          export or transfer, whether directly or indirectly, the Program, or
          any portion thereof, or any system containing such Program or portion
          thereof, to anyone outside the United States (including further
          export if BEA took delivery of the Program outside the United States)
          without first complying strictly and fully with all export controls
          that may be imposed on the Program by the United States Government or
          any country or organization of nations within whose jurisdiction BEA
          operates or does business.  In particular, BEA assures Novell that,
          absent any required prior authorization from the Bureau of Export
          Administration, U.S. Department of Commerce, 14th and Constitution
          Avenue, Washington DC 20230, BEA will not export or reexport (as
          defined in Section 779 of the Export Administration Regulations, as
          amended ("Regulations")) the Program or any technical data or other
          confidential information, or direct product of any of the foregoing
          to Iran, Iraq, Syria, the People's Republic of China, Yugoslavia
          (Serbia and Montenegro), or to any country in Country Groups Q, S,
          W, Y, or Z as defined in the supplement No. 1 to Section 770 of the
          Regulations, or such other countries as come under restriction by
          action of the United States Government, or to nationals from or
          residing in the foregoing countries, without first obtaining
          permission from the appropriate United States Government authorities.
          The countries subject to restriction by action of the United States
          Government are subject to change, and it is BEA's responsibility to
          comply with the United States Government requirements as they may be
          amended from time to time.

    25.16 COUNTERPARTS.  This Agreement may be executed in
          counterparts, each of which shall be deemed an original, and all of
          which shall be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have entered into this Agreement effective as
of the Signing Date.


NOVELL, INC.                            BEA SYSTEMS, INC.



Signature /s/ Novell, Inc.            Signature /s/ BEA Systems, Inc.
         -------------------------             ---------------------------
Print Name                            Print Name
         -------------------------              --------------------------
Print Title                           Print Title
           -----------------------               -------------------------
Date                                  Date
    -------------------------------       --------------------------------

                                   PAGE 34
<PAGE>



EXHIBIT A: TUXEDO SOFTWARE DELIVERABLES
(To be completed by Closing)


SOURCE CODE
- -----------

TUXEDO software Versions 4.2.2, 5.0 and 6.0 and all other versions,
modifications and development work product on these versions as of Closing.
TUXEDO Software shall include any and all modifications made by Novell's
Consulting Group as special modifications, minor enhancements and product
ports.  TUXEDO Software shall also include related educational courseware
developed for the TUXEDO Software and education and training of users.

BINARY CODE
- -----------


DOCUMENTATION
- -------------


                                   PAGE 35
<PAGE>



EXHIBIT B:     ASSUMED CONTRACTS
(To be completed by Closing)


                                   PAGE 36
<PAGE>


EXHIBIT C: SUBSIDIARIES & CONTROLLED PERSONS(1)
(To be completed by Closing)

WHOLLY-OWNED SUBSIDIARIES
- -------------------------





CONTROLLED PERSONS
- ------------------




- ---------------
(1) Additional entities may be added to this Exhibit upon the mutual 
    agreement of the parties.


                                   PAGE 37
<PAGE>



EXHIBIT D: TRANSFERRED ASSETS
(To be Completed by Closing)


1.  The equipment, furnishings, and other personal property owned by Novell and
used exclusively by its TUXEDO division personnel.

2.  Novell's Ownership in USL Mexico and USL SA

3.  Inventory, which BEA can sell during a 90-day transition period after
Closing, provided that BEA reasonably identifies itself as the seller to the
purchaser through the use of inventory stickers or some other mechanism.


                                   PAGE 38
<PAGE>


EXHIBIT E: TUXEDO TRADEMARK LICENSES
(To be Completed by Closing)


                                   PAGE 39
<PAGE>


EXHIBIT F:     SOURCE CODE SUBLICENSING

BEA may grant sublicenses of Source Code subject to the following minimum terms
and conditions:

1.   Subject to Section 23, BEA may grant sublicenses to Source Code for the
     purposes specified in Section 4.1.  Such Source Code shall continue to be
     subject to the terms and conditions of this Agreement.  Sublicensees may
     only make those number of copies of Source Code as reasonably necessary
     for backup and archival purposes.

2.   Sublicensees may modify Source Code to create Derivative Works, provided
     the Derivative Works are for the purposes stated in Section 4.1.  All
     Derivative Works created by sublicensees shall continue to be subject to
     the terms and conditions of this Agreement.

3.   Except for source code escrow or similar arrangements to allow limited use
     of Source Code or Derivative Works thereof for maintenance purposes,
     sublicensees of Source Code shall not be authorized to sublicense Source
     Code or Derivative Works thereof, except that in the case of the latter,
     sublicensees shall be permitted to grant Binary Code sublicenses pursuant
     to a grant of rights from BEA.

4.   BEA, upon the written request of Novell, shall provide Novell with the
     names of its sublicensees and the locations of each copy of the Source
     Code and Derivative Works thereof.

5.   Sublicensees of Source Code shall be subject to confidentiality provisions
     at least as stringent as those specified in this Agreement with respect to
     Source Code.

6.   Novell shall not be liable to any sublicensees of BEA for any reason
     whatsoever, and BEA agrees to indemnify Novell from and against any
     imputed liability of BEA.

                                   PAGE 40
<PAGE>



EXHIBIT G: FORM OF GUARANTY

                            GUARANTY

     This Guaranty ("Guaranty"), dated as of________________________________,
199____, is by Warburg, Pincus Ventures, L.P. as guarantor ("Guarantor"), for
the benefit of Novell, Inc. ("Novell").

RECITALS:
- --------

     A.   Novell and BEA Systems, Inc. ("BEA") have entered into that certain
TUXEDO License and Distribution Agreement, dated _________________, 1995 (the
"Agreement"), pursuant to which Novell has agreed to grant to BEA certain
exclusive and strategic rights with respect to Novell's TUXEDO software, in
consideration of the payments and other agreements and obligations of BEA
described therein.  Execution of this Guaranty is a condition to the closing of
the Agreement.

     B.   Guarantor has a substantial financial interest in BEA and will
materially benefit from the transaction contemplated by the Agreement.

AGREEMENTS:
- ----------

     NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees
as follows:

     1.   PERSONAL GUARANTY.  To induce Novell to enter into the transaction
with BEA described above, Guarantor hereby personally, absolutely and
unconditionally guarantees performance of all obligations of BEA to make
payments to Novell, as more specifically described in the Agreement, as it may
be amended from time to time with the consent of BEA (the "Obligations").  The
parties acknowledge that, unless and until BEA delivers to Novell a written
notice that BEA is exercising its option to purchase a perpetual license,
pursuant to Section 14.2 of the Agreement, such option payment is not
considered an obligation of BEA to make a payment to Novell.  This Guaranty is
an unconditional, continuing and irrevocable guaranty of payment of the
Obligations as agreed.  The liability of Guarantor hereunder is independent of
the Obligations and of the liabilities of BEA.

     2.   REPRESENTATIONS, WARRANTIES AND COVENANTS.  Guarantor hereby
represents, warrants, covenants and agrees that, upon BEA's failure to perform
when due any of the Obligations, Guarantor shall pay to Novell, upon demand,
the unpaid amount of such Obligation.  Guarantor agrees, as principal obligor
and not as guarantor only, to pay to Novell upon demand all costs and expenses
(including reasonable attorneys' fees) incurred or expended by Novell in
connection with the enforcement of this Guaranty.

     3.   WAIVERS.  In connection with this Guaranty, Guarantor hereby waives
the following:

          3.1  Any right to require Novell to first proceed against BEA or any
other person, or to proceed against or exhaust any security held by Novell at
any time, or to pursue any other remedy in its power before proceeding against
Guarantor;

                                   41
<PAGE>


          3.2  All requirements, if any, of diligence, presentment, demand,
protest, notice of default and non-payment and all other demands and notices of
any kind with respect to the Obligations, to the extent permitted by law;

          3.3  Any defense due to unenforceability or irregularity with respect
to the Obligations or any limitation of BEA's liability with respect to the
Obligations, or based upon an election of remedies by Novell;

          3.4  Any duty of Novell to disclose to Guarantor any facts it may now
or hereafter know about BEA, regardless of whether Novell has reason to believe
that such facts are unknown to Guarantor or materially increase the risk beyond
that which Guarantor intended to assume.  Guarantor agrees that, due to its
close relationship with BEA, Guarantor assumes full responsibility for keeping
informed of all circumstances affecting the risk of nonperformance; and

          3.5  All other statutory or common law suretyship defenses now or
hereafter available.

     4.   CONSENTS.  Guarantor hereby consents to the following and agrees that
this Guaranty will not be affected thereby:

          4.1  Any modification, renewal, extension or release of the
Obligations, including without limitation any extension of time for performance
or payment, any delay in the enforcement of Novell's rights, and any
modification of any duty or obligation of BEA;

          4.2  Waiver by Novell of performance or payment of damages by BEA
with respect to any or all of the Obligations, or assignment by Novell of its
rights under the Obligations; and

          4.3  Acceptance of any property as security, release of any property
from any security interest held by Novell, or the addition of or release of any
other guarantor of the Obligations.

     5.   BANKRUPTCY, ETC.  The guarantees contained herein shall not be
affected by bankruptcy, insolvency, receivership, reorganization or similar
proceeding affecting BEA or its assets, or by the voluntary or involuntary
liquidation, sale or other disposition of all or substantially all of the
assets of BEA.

     6.   SUBROGATION RIGHTS AND SUBORDINATION.  Until all Obligations are paid
in full, Guarantor agrees that it shall have no right of subrogation against
BEA and waives any rights to enforce any remedy that Novell may have against
BEA and any right to participate in any security that may be held by Novell.
Guarantor agrees that all indebtedness of BEA to Guarantor, whether now or
hereafter incurred, shall be subordinated in all respects to all Obligations
hereby guaranteed.

     7.   ACTIONS.  Guarantor's obligations under this Guaranty are independent
of the Obligations of BEA and, if there is a default or breach by Guarantor
hereunder, a separate action or actions may be brought and prosecuted against
Guarantor whether or not BEA is joined in such action or a separate action is
brought against BEA.  Novell may maintain successive actions for other
defaults.  All rights and 

                                   42
<PAGE>


remedies of Novell shall be cumulative and not alternative, and such rights 
and remedies shall be in addition to all rights and remedies given to Novell 
by law.  Novell's rights shall not be exhausted by its exercise of any of its 
rights or remedies or by any action or successive action until all 
Obligations hereby guaranteed have been performed as agreed or Novell has 
been fully compensated for any failure to adequately perform.  In any action 
against Guarantor based upon a default under or breach of this Guaranty, 
Novell shall be entitled to recover its costs and reasonable attorneys' fees.

     8.   TERMINATION OF GUARANTY.  This Guaranty shall terminate at the time
all Obligations of BEA relating to the Initial Term are satisfied in full;
provided, however, that in the event of a public offering of BEA stock in which
BEA obtains at least $50 million in equity investments, and BEA creates and
maintains an interest-bearing escrow account holding at least fifty percent
(50%) of the amount of outstanding financial obligations of BEA during the
Initial Term, Novell agrees to terminate this Guaranty and release Guarantor
from its obligations hereunder, effective at the time BEA delivers to Novell
reasonably satisfactory evidence that such minimum funds have been obtained
from a public offering and the escrow account has been formed and fully funded.

     8.   BINDING EFFECT; ASSIGNABILITY.  This Guaranty shall inure to the
benefit of and shall be binding upon Novell and Guarantor and their respective
successors, representatives, heirs, executors, administrators and assigns.
Guarantor may not assign this Guaranty without Novell's prior written consent.

     9.   ENTIRE AGREEMENT; AMENDMENT.  This writing constitutes the entire
agreement of Guarantor with respect to the subject matter of this Guaranty and
may not be modified, amended or terminated except by a written agreement
specifically referring to this Guaranty signed by Guarantor and Novell.

     10.  NO WAIVER.  No waiver of any breach or default under this Guaranty
shall be considered valid unless in writing and signed by the party giving such
waiver.

     11.  APPLICABLE LAW.  This Guaranty and all amendments hereof shall be
governed by and construed in accordance with the laws of the State of Utah,
without regard to conflicts of laws provisions.

     12.  SEVERABILITY.  If any term of this Guaranty is deemed invalid or
unenforceable by a court or authority of competent jurisdiction, that term
shall be reduced or otherwise modified by such court or authority, but only to
the minimum extent necessary to make it valid and unenforceable.  If any term
cannot be reduced or modified to make it reasonable and permit its enforcement,
such term shall be severed from this Guaranty and the remaining terms shall be
interpreted in such a way as to give maximum validity and enforceability to
this Guaranty.

                              GUARANTOR:

                              WARBURG, PINCUS VENTURES, L.P.

                              By: /s/ William H. Janeway
                                 -------------------------------------
                                   43
<PAGE>



                              Title: Managing Director
                                    ----------------------------------

                                   44
<PAGE>

EXHIBIT H: TUXEDO EMPLOYEES
(To be Completed by Closing)


                                   45
<PAGE>


EXHIBIT I: FORM OF BILL OF SALE

                  BILL OF SALE AND ASSIGNMENT OF ASSETS


     Novell, Inc., a Delaware corporation ("Novell"), in consideration of Ten
Dollars and other good and valuable consideration to it in hand paid, the
receipt and sufficiency of which is hereby acknowledged, does hereby sell,
grant, transfer, convey, assign, and deliver unto BEA Systems, Inc., a _______
corporation ("BEA"), all of Novell's right, title and interest in and to each
of the Transferred Assets, as such term is defined in that certain TUXEDO
License and Distribution Agreement between BEA and Novell, dated as of
_________, 1995 (the "Agreement").

     Novell represents and warrants to BEA that (i) Novell is the lawful owner
of title to the Transferred Assets, (ii) Novell has the right to sell the
Transferred Assets to BEA, and (iii) there are no liens or encumbrances on or
against the Transferred Assets, except for those encumbrances and liabilities
described in the Agreement or documents related thereto.

     Novell shall execute, acknowledge and deliver all such further deeds,
bills of sale, transfers, assignments, conveyances, powers of attorney,
conveying and confirming unto BEA the Transferred Assets, as BEA shall
reasonably require.

     IN WITNESS WHEREOF, Novell has caused this instrument to be executed as of
________, 199_.


                                   NOVELL, INC.

                                   By: _______________________________
                                   Its: ______________________________

                                   46
<PAGE>

EXHIBIT J: SAMPLE INITIAL PRESS RELEASE

APPROVAL DRAFT, 1/23

                                       
 NOVELL AND BEA SYSTEMS ANNOUNCE STRATEGIC PARTNERSHIP TO DEVELOP, DISTRIBUTE
                                TUXEDO SOFTWARE

     RESPONDING TO GROWING MARKET DEMAND, COMPANIES TO ENHANCE AND EXPAND
               TUXEDO SYSTEM ACROSS NETWARE, UNIX, NT PLATFORMS

     OREM, UT AND SUNNYVALE, CA -- JANUARY 29, 1996 -- Novell, Inc. (NOVL) and
BEA Systems, Inc. of Sunnyvale, CA. today announced a strategic partnership to
develop and distribute the TUXEDO System, the leading open transaction
management software used by businesses to develop and deploy multi-tier,
client/server applications.

     The TUXEDO System is a development, management and deployment environment
for multi-tier client/server applications and is the leading portable
transaction manager with more than 40 percent of the market.  It is used to
create scalable, high performance, secure, reliable business-critical
applications, as well as more general purpose client/server applications.  It
runs on more than 35 platforms including NetWare, most UNIX variants, NT, and
virtually every client operating environment.  Customer demand for the TUXEDO
System has doubled for the past two consecutive years.

     Under the terms of the agreement, both companies will invest development
resources to enhance and expand the TUXEDO product line.  Novell's development
focus will be to integrate TUXEDO with NetWare, including its industry standard
network directory services (NDS), and NetWare Connect Service for managed
Internet services.  BEA will be responsible for developing the features and
utilities needed for enterprise line-of-business solutions running on UNIX, NT,
and other platforms, including their integration with existing legacy systems.
BEA will also become the master distributor of TUXEDO on non-NetWare platforms.

     The partnership advances Novell's strategy to enable a Smart Global
Network by extending distributed network services such as TUXEDO's on-line
transaction processing (OLTP) capabilities across multiple client and server
platforms and into managed Internet solutions.  Through the further integration
of TUXEDO with NetWare, Novell will enable customers to more easily manage and
secure transaction-intensive applications deployed across networks for use in
electronic commerce, securities trading, manufacturing process control, retail
inventory management, and other mission-critical areas.

                                   47
<PAGE>

     Since traditional TUXEDO users on UNIX or NT develop custom line-of-
business solutions, Novell chose to partner with BEA because they will dedicate
the resources required from both a consulting and channel perspective, as well
as a product-features perspective to better meet these customer-specific needs.
                                       
          "Our partnership with BEA Systems enables Novell to maintain its
commitment to TUXEDO and its rapidly expanding customer base while increasing
Novell's  focus to making TUXEDO services an integral part of the Smart Global
Network spanning from workgroup LANs to the Internet," said Richard King,
executive vice president and general manager of the Novell Systems Group. "As a
leader in enterprise middleware solutions, BEA Systems is the ideal partner to
fully support TUXEDO market  growth among its base of enterprise and systems
customers.  Novell believes the agreement will widen TUXEDO's market lead as
the platform for open transaction intensive client/server applications."

     "We are extremely pleased to be working with Novell to expand both
TUXEDO's capabilities and its distribution," said Bill Coleman, President and
CEO of BEA Systems.  "We already have broad TUXEDO expertise within BEA, a
large installed base of TUXEDO customers, and are focusing our entire company
on enterprise middleware solutions with  TUXEDO as a core technology component.
We expect this partnership to allow us to drive significant enhancements into
the product, and to ease the path for customers adopting  TUXEDO by greatly
expanding sales channels and consulting availability "

     Jim Johnson, President of the Standish Group, an industry consulting firm
specializing in transaction management middleware, said, "This relationship
provides the best of all worlds.   Multi-tier client/server application
customers get the features and consulting they need from the consulting-
intensive channel to be set up by BEA.  At the same time, TUXEDO will be better
integrated and more easily useable in a NetWare or Novell distributed services
environment, and will be used to enhance the capabilities of the products that
make that environment possible."

     The joint development and master distributor agreement with BEA is
effective as of February 26, 1996.  Current Novell TUXEDO distributors and
customers have already been 

                                   48
<PAGE>


notified of the agreement.  Any distributor or customer transitions will be 
accomplished within 90 days. 

ABOUT BEA

     BEA Systems is a leading provider of enterprise middleware solutions. 
Founded in 1995, BEA's mission is to deliver a distributed application 
framework, using enhanced transaction processing monitor technology and 
professional services, to enable distributed mission-critical applications 
that can seamlessly work with both legacy and client/server environments.  
With today's announcement, BEA will be the developer and master distributor 
of TUXEDO on all operating systems other than NetWare and plans to continue 
building its solution set through development, partnerships, and 
acquisitions. Headquartered in Sunnyvale, Calif., BEA is venture funded by 
Warbug, Pincus Ventures, L.P.

     Novell, Inc. (NASDAQ: NOVL), is the world's leading networking software 
provider. Novell software provides the infrastructure for a networked world, 
enabling our customers to connect with other people and the information they 
need, anytime and anyplace. Novell partners with other technology and market 
leaders to help customers make networks a part of their everyday lives.

                                      ###


                                   49

<PAGE>

                              FIRST AMENDMENT TO      
                   TUXEDO LICENSE AND DISTRIBUTION AGREEMENT

     This first amendment (this "Amendment") is entered into as of February 
23, 1996, between Novell, Inc., a Delaware corporation with a place of 
business at 122 East 1700 South, Provo, Utah 84606 ("Novell"), and BEA 
Systems, Inc., a Delaware corporation with its principal place of business 
located at 385 Moffett Park Drive, Sunnyvale, California 94089 ("BEA").

                                   RECITALS
                                   --------

     A.   Novell and BEA entered into a TUXEDO License and Distribution 
Agreement, dated effective January 24, 1996 (the "Distribution Agreement"), 
with the closing on February 23, 1996.  All capitalized terms used herein and 
not defined herein shall have the respective meanings specified in the 
Distribution Agreement.

     B.   The parties now desire to amend the Distribution Agreement as 
hereinafter provided.

     NOW, THEREFORE, A consideration of the promises included herein and 
other good and valuable consideration, the receipt and sufficiency of which 
is hereby acknowledged, the parties hereto agree as follows:

                                   AGREEMENT
                                   ---------

1.   DEFINITION OF TRANSFERRED ASSETS.  The definition of Transferred Assets 
in Section 2.25 of the Distribution Agreement is amended to read as follows:

     TRANSFERRED ASSETS shall mean (i) certain Items of equipment, furnishings
     and other personal property previously used by Novell's TUXEDO division, 
     as listed in Exhibit D; (ii) all of Novell's shares of stock in the 
     following entities: USL Mexico and USL SA, as identified in Exhibit D: 
     and (iii) any other items listed in Exhibit D.
     
2.   DEFINITION OF RSA SOURCE CODE.  A new section 2.27 is added as follows:

     RSA SOURCE CODE.  RSA Source Code shall mean the encryption code 
     licensed by Novell from RSA Security, Inc. and included In the TUXEDO 
     Software for security and authentication purposes.  RSA Source Code 
     shall be considered Core Code for the purposes of this Distribution 
     Agreement.
     
3.   BEA ADDRESS.  The address for BEA in the preamble and Sections 7 and 
25.1 of the Distribution Agreement shall be changed to: BEA Systems, Inc., 
385 Moffett Park Drive, Sunnyvale, California 94089.

4.   LICENSE TO RSA SOURCE CODE.  New Sections 4.3 and 4.4 are added to the
Distribution Agreement as follows:

          4.3  Notwithstanding anything to the contrary set forth in
          Section 4 above, RSA Source Code shall be licensed by Novell to BEA
          as set forth herein.  Novell hereby grants and BEA hereby accepts a
          non-transferable (except as provided herein) license:

               4.3.1  to use, reproduce, modify, compile and link the
               RSA Source Code within the US solely for internal use within the
               US with the Tuxedo Software under the Distribution Agreement for
               the same security and authentication purposes for which Novell
               internally made use of the RSA Source Code or security and
               authentication.

               4.3.2  to distribute directly and indirectly, world-
               wide to Its OEMs, Resellers, VARs and end users the binary code
               compiled from RSA Source Code as permitted in this Distribution
               Agreement.  No rights are granted to BEA to sublicense the RSA
               Source Code.

          4.4  BEA agrees that it will reproduce and shall not remove or
          modify any proprietary notices associated with the RSA Source Code,
          and any binary version thereof, as provided to BEA by

<PAGE>

          Novell.

5.   INDEMNIFICATION BY NOVELL.  The first sentence of Section 12.7 is amended
to read as follows:

          Novell hereby agrees to indemnify and hold BEA harmless against
          any loss, liability, damage. cost or expense (including reasonable
          legal fees) arising out of any third party claims or suits which may
          be brought or made against BEA or its licensees arising out of the
          use by BEA or its licensee of the Mark in the form expressly licensed
          hereunder, which assert that such use of the Mark violates such
          party's trademark rights in the U.S. or In any other country in which
          Novell has made substantial use of the Mark.

6.   PAYMENTS FOR INITIAL TERM.  Section 13.1 of the Distribution Agreement is
amended as follows:

     BEA will pay to Novell an additional $2 million for Year I of the Initial
     Term, with $1 million payable on January 1, 1997 and $1 million payable on
     April 1, 1997.  The amount for Year 2 of the Initial Term will be reduced
     from $21 million to $20 million, such that the payment due June 30, 1997
     is reduced to $4.25 million.

7.   CONSIDERATION FOR TRANSFERRED ASSETS.  Section 13.2 of the Distribution 
Agreement is amended so that the fair value of the Transferred Assets will be 
determined within thirty (30) days after Closing, and not prior to Closing.

8.   ONE-TIME PAYMENT.  The one-time payment of $25 million in Section 14.2 of
the Distribution Agreement is reduced to $24 million.

9.   INDEMNIFICATION BY NOVELL.  Section 21.1 is amended to read as follows:

     Novell agrees to indemnify, defend and hold BEA harmless from any and all
     damages, liabilities, costs and expenses incurred by BEA as a result of
     any claims, judgments or adjudication against BEA or its licensees that
     TUXEDO Software or Novell Documentation infringes the copyright or trade
     secret or US patent rights of any third party, provided: (i) BEA shall
     promptly notify Novell in writing of the claim; and (ii) Novell shall have
     the sole control of the defense of the action and BEA provides Novell with
     full information and assistance for its defense, settlement and/or
     compromise.

10.  EXHIBITS.  Exhibits A, B, C, D, E and H of the Distribution Agreement are
amended as attached hereto.

11.  ENTIRE AGREEMENT.  This Amendment (including the attached Exhibits), 
together with the Distribution Agreement (including any previously executed 
amendments thereto), constitutes the entire agreement between the parties 
with respect to the subject matter hereof

12.  EFFECT OF AMENDMENT.  Except as modified by this Amendment, all terms 
and conditions of the Distribution Agreement shall remain in full force and 
effect.

     Each of the undersigned represents and warrants that he or she is duly 
authorized to sign this Amendment on behalf of the party he or she 
represents. Each party has read, understands and agrees to the terms and 
conditions of this Amendment.

NOVELL, INC.                  BEA SYSTEMS, INC.

By:/s/ Edward R. Smith             By:/s/ Edward W. Scott, Jr.
   -------------------                --------------------------------
Name:  Edward R. Smith             Name: Edward W. Scott, Jr.
    ------------------                 -------------------------------
Title:  VP, Business Development   Title:  Executive Vice President
     ----------------------------       ------------------------------

<PAGE>


Exhibit A:  TUXEDO Software Deliverables


SOURCE CODE
- -----------

All TUXEDO software for all versions of TUXEDO, including versions 4.2.2, 5.x 
and 6.x, and all other versions, modifications, test frameworks, and 
development work on these versions as of Closing.  TUXEDO Software shall 
include any and all modifications made by Novell's Consulting Group such as 
special modifications, minor enhancements and product ports.  TUXEDO 
Software shall include all current development tools, version control tools, 
MR(modification request)tracking tools, and all other tools related the 
development and productization of the TUXEDO software.  TUXEDO Software shall 
also include all related educational courseware developed for the TUXEDO 
Software for the education and training of users, in both electronic and 
hardcopy form, including the TUXEDO System Internals, TUXEDO /D Developer and 
Internals, TUXEDO Host Internals, the TUXEDO System 4, 5 and 6 Administrator 
courses, and all other versions, modifications and other TUXEDO training 
materials.

BINARY CODE 
- -----------

All binary versions of be TUXEDO Software product, as defined above, 
including all versions of system 4.x, system 5.x, system 6.x and related 
add-on products.

DOCUMENTATION
- -------------

All TUXEDO source code documentation files, including those for the TUXEDO 
reference manuals, message manuals, and guides, internal technical 
documentation, and all TUXEDO marketing, sales, presentation and any other 
product description or marketing collateral.  All binary documentation files, 
including those processed with EBT software to make them browsable.

- --------------------------------------------------------------------------------

Tuxedo License Agreement     -Novell, Inc.-122 East 1700 South-Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9  PAGE 35                    January 24, 1996

<PAGE>

Exhibit B: Assumed Contracts

Novell and BEA each acknowledge and agree that this list of Assumed Contracts 
may not be complete, and that BEA has not had the opportunity prior to 
Closing to review all of the listed Assumed Contracts. Accordingly, Novell 
and BEA shall attempt in good faith to resolve any issues that may arise 
regarding any omissions or other problems with the list or with the terms and 
conditions of any Assumed Contracts. In addition, Novell shall reasonably 
cooperate, such as by agreeing to assign and obtaining agreements to assign, 
to ensure that BEA enjoys the benefits of the Assumed Contracts.

In the event that any of the Assumed Contracts cover other Novell software 
products in addition to TUXEDO, only the rights and obligations of Novell 
relating to TUXEDO shall be assigned as an Assumed Contract.

                   SECTION 1 - TUXEDO SYSTEM CONTRACTS

Customer Name ................................Contract ID
- -------------                                 -----------

  [***]        ............................... 006448
  [***]        ............................... 034160-01
  [***]        ............................... 034304-01
  [***]        ............................... 034818-01
  [***]        ............................... 000302
  [***]        ............................... 001402
  [***]        ............................... 001403
  [***]        ............................... 001578
  [***]        ............................... 002305
  [***]        ............................... 002313
  [***]        ............................... 003315
  [***]        ............................... 004317
  [***]        ............................... 007792
  [***]        ............................... 010327
  [***]        ............................... 011441
  [***]        ............................... 011448
  [***]        ............................... 012360
  [***]        ............................... 012373
  [***]        ............................... 013206
  [***]        ............................... 014541
  [***]        ............................... 014901
  [***]        ............................... 014902
  [***]        ............................... 015505
  [***]        ............................... 016416
  [***]        ............................... 018249
  [***]        ............................... 018250
  [***]        ............................... 019180
  [***]        ............................... 027748
  [***]        ............................... 029582
  [***]        ............................... 029806
  [***]        ............................... 029816
  [***]        ............................... 029817
  [***]        ............................... 031782
  [***]        ............................... 033204
  [***]        ............................... 033244
  [***]        ............................... 033318
  [***]        ............................... 033326
  [***]        ............................... 033371
  [***]        ............................... 033372
  [***]        ............................... 033478
  [***]   .................................... 034664-01
  [***]                         .............. 034234-01
  [***]        ............................... 033410 
  [***]        ............................... 034534-01
American Telephone & Telegraph ............... 018749
American Telephone & Telegraph ............... 019261
American Telephone & Telegraph ............... 019675
American Telephone & Telegraph ............... 020051
American Telephone & Telegraph ............... 027821
American Telephone & Telegraph ............... 027829-01
American Telephone & Telegraph ............... 029579
American Telephone & Telegraph ............... 029584
American Telephone & Telegraph Company ....... 000683
American Telephone & Telegraph Company ....... 003575
American Telephone & Telegraph Company ....... 003576
American Telephone & Telegraph Corporation ... 030431
American Telephone & Telegraph Corporation ... 033206
American Telephone & Telegraph Corporation ... 033280
Andersen Consulting .......................... 034027-01
Andersen Consulting .......................... 034051-02
Andersen Consulting .......................... 034051-03
Andersen Consulting .......................... 034157-01
Andersen Consulting .......................... 034280-01
Andersen Consulting .......................... 034301-01
Andersen Consulting .......................... 034302-01
Andersen Consulting .......................... 034464-01
Andersen Consulting .......................... 034465-01
Andersen Consulting San Bhd .................. 034132-01
AT&T ......................................... 028148
AT&T Bell Laboratories ....................... 009650
AT&T Bell Laboratories ....................... 033321
AT&T Bell Laboratories ....................... 033333

- --------------------------------------------------------------------------------

Tuxedo License Agreement   -Novell, Inc. -122 East 1700 South -Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9    PAGE 36                  January 24, 1996

<PAGE>
AT&T Bell Labs ............................... 029810
AT&T Business Customer Systems ............... 000490
AT&T Computer Systems Division ............... 009647
AT&T Computer Systems Division ............... 009648
AT&T Computer Systems Division ............... 033328
AT&T Consumer Communications Services ........ 033397
AT&T Consumer Communications Services ........ 034081-01
AT&T Consumer Communications Services ........ 034134-01
AT&T Consumer Communications Services ........ 034451-01
AT&T Consumer Communications Services ........ 034460-01
AT&T Consumer Communications Services ........ 034530-01
AT&T Consumer Communications Services ........ 034400-01
AT&T Contract Services Organization  ......... 014192
AT&T Contract Services Organization  ......... 033389
AT&T Global Business Communications Systems .. 011585
AT&T Global Business Communications Systems .. 011586
AT&T Global Business Communications Systems .. 033385-01
AT&T Global Business Communications Systems .. 033386-01
AT&T Global Business Communications Systems .. 033392-01
AT&T Global Business Communications Systems .. 034025-01
AT&T Global Business Communications Systems .. 034026-01
AT&T Global Business Communications Systems .. 034133-01
AT&T Global Business Communications Systems .. 034287-01
AT&T Global Business Communications Systems .. 034288-01
AT&T Information Management Systems .......... 009651
AT&T Information Management Systems .......... 011903
AT&T Information Management Systems .......... 013287
AT&T Information Management Systems .......... 013288
AT&T Information Management Systems .......... 013766
AT&T Information Management Systems .......... 013767
AT&T Information Management Systems .......... 033322
AT&T Information Management Systems .......... 034086-01
AT&T Istel Limited ........................... 006150
AT&T Istel Limited ........................... 006458
AT&T Network Services Division ............... 033417
AT&T Network Services Division ............... 033418
AT&T-IMS ..................................... 034086-01
  [***]              ......................... 034480-01
  [***]             .......................... 034303-01
Bell Communications Research, Inc. ........... 034013-01
  [***]                ....................... 034053-01
Bull ......................................... 006110
Bull ......................................... 006112
Bull SA ...................................... 008004
Bull SA ...................................... 022390
Bull SA ...................................... 022400
Bull SA ...................................... 022411
Bull SA ...................................... 022869
Bull SA ...................................... 024127
Bull SA ...................................... 024128
Bull SA ...................................... 024396
Bull SA ...................................... 024397
Bull SA ...................................... 025194
Bull SA ...................................... 025198
Bull SA ...................................... 025205
Bull SA ...................................... 027353
Bull SA ...................................... 034363-01
Bull SA ...................................... 034364-01
Bull SA ...................................... 034365-01
Bull SA ...................................... 034366-01
Bull SA ...................................... 034369-01
Bull SA ...................................... 034370-01
Bull SA ...................................... 034372-01
Bull SA ...................................... 034373-01
Cincinnati Bell Information Systems, Inc. .... 034243-01
Cincinnati Bell Information Systems, Inc. .... 034441-01
  [***] ...................................... 034122-01
  [***]             .......................... 034161-01
  [***]       ................................ 013270
  [***]             .......................... 034004-01
  [***]     .................................. 034290-01
  [***]....................................... 034140-01
Cycare Systems ............................... 034299-01
Data General Corporation ..................... 000364
Data General Corporation ..................... 000837
Data General Corporation ..................... 003039
Data General Corporation ..................... 009332
Data General Corporation ..................... 009333
Data General Corporation ..................... 013239
Data General Corporation ..................... 018941
Data General Corporation ..................... 027752
Data General Corporation ..................... 029587
Data General Corporation ..................... 033335
Data General Corporation ..................... 033485
Data General Corporation ..................... 034101-01
Data General Corporation ..................... 034108-01
Data General Corporation ..................... 034145-01
Data General Corporation ..................... 034146-01
Digital Equipment Corporation ................ 011273
Digital Equipment Corporation ................ 016445
Digital Equipment Corporation ................ 016446
Digital Equipment Corporation ................ 016447
Digital Equipment Corporation ................ 018256
Digital Equipment Corporation ................ 019268
Digital Equipment Corporation ................ 027753
Digital Equipment Corporation ................ 034014-01
  [***]                 ...................... 017750
Electronic Data Systems Corporation .......... 028251
Electronic Data Systems Corporation .......... 028252
Electronic Data Systems Corporation .......... 033413
Electronic Data Systems Corporation .......... 034238-01

  [***]....................................... 034601-01

  [***]....................................... 034623-01
  [***]                ....................... 034002-01
  [***]       ................................ 034112-01
Federal Express Corporation .................. 033400
Federal Express Corporation .................. 033406
Fidelity Investments ......................... 034425-01
Fidelity Investments ......................... 034455-01
Fidelity Investments ......................... 034457-01
Fidelity Investments ......................... 034461-01
  [***]               ........................ 034281-01

- --------------------------------------------------------------------------------

Tuxedo License Agreement   -Novell, Inc. -122 East 1700 South -Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9    PAGE 37                  January 24, 1996

<PAGE>

  [***]           ......................... 034284-01
  [***]                ....................... 006334
  [***]                ....................... 022835
  [***]                ....................... 022836
  [***]                ....................... 022847
  [***]                ....................... 027331
  [***]                ....................... 032685
  [***]                ....................... 032740
  [***]          ............................. 033411
  [***]          ............................. 034469-01
  [***]             .......................... 034362-01
  [***]                ....................... 034415-01
  [***]                ....................... 034472-01
Hewlett Packard Company ...................... 033383
Hewlett Packard Company ...................... 034277-01
Hewlett Packard Company ...................... 034285-01
   [*] ....................................... MBIN-00015
   [*] ....................................... APREF-4
                   ........................... 034478-01
Independence Technologies Inc. ............... 001302-01
Independence Technologies Inc. ............... 003288-01
Independence Technologies Inc. ............... 004325-01
Independence Technologies Inc. ............... 008190-01
Independence Technologies Inc. ............... 011480-01
Independence Technologies Inc. ............... 011481-01
Independence Technologies Inc. ............... 011898-01
Independence Technologies Inc. ............... 011899-01
Independence Technologies Inc. ............... 011900-01
Independence Technologies Inc. ............... 014163-01
Independence Technologies Inc. ............... 014166-01
Independence Technologies Inc. ............... 018274-01
Independence Technologies Inc. ............... 029583-01
Independence Technologies Inc. ............... 029624-01
Independence Technologies Inc. ............... 029832-01
Independence Technologies Inc. ............... 033263-01
Independence Technologies Inc. ............... 033327-01
Information Foundation, Inc. ................. 034259-01
Information Management Company ............... 000435
Information Management Company ............... 001066
Information Management Company ............... 004324
Information Management Company ............... 016493
Information Management Company ............... 016494
Information Management Company ............... 016495
Information Management Company ............... 017564
Information Management Company ............... 017565
Information Management Company ............... 029833
Information Management Company ............... 033390
  [***]           ............................ 006088
International Business Machines Corporation .. 034232-01
International Computers Limited .............. 006137
International Computers Limited .............. 006138
International Computers Limited .............. 006158
International Computers Limited .............. 006453
International Computers Limited .............. 021393
International Computers Limited .............. 022495
International Computers Limited .............. 024282
International Computers Limited .............. 025267
  [***]                         .............. 025276
  [***]                         .............. 025314
  [***]                         .............. 025326
  [***]                         .............. 025332
  [***]                         .............. 025333
  [***]                         .............. 025334
  [***]                         .............. 028339
  [***]                         .............. 032551
  [***]                         .............. 033225
  [***]                         .............. 033226
  [***]                         .............. 034006-01
  [***]                         .............. 034048-01
  [***]                         .............. 034334-01
  [***]                         .............. 034335-01
  [***]                         .............. 034336-01
  [***]                         .............. 034337-01
  [***]                         .............. 034338-01
  [***]                         .............. 034339-01
  [***]                         .............. 034340-01
  [***]                         .............. 034341-01
  [***]                 ...................... 003262
  [***]                 ...................... 006440
  [***]                 ...................... 008001
  [***]                 ...................... 008002
  [***]                 ...................... 026532
J.J. Kenny Services Inc. ..................... 003056
J.J. Kenny Services Inc. ..................... 033378
  [***]....................................... 028356
  [***]....................................... 034418-01
  [***]                     .................. 000387
  [***]                     .................. 003035
  [***]                     .................. 003064
  [***]                     .................. 007813
  [***]                     .................. 007814
  [***]                     .................. 011475
  [***]                     .................. 019870
  [***]                     .................. 029596
  [***]                     .................. 033367
  [***]                     .................. 033387
  [***]             .......................... Apref-5
  [***]                 ...................... 005552
  [***]                                        021427
  [***]                                        022452
  [***]                                        022453
  [***]                                        026200
  [***]                                        027173
Motorola Inc.................................. 000864
Motorola Inc.................................. 007743
Motorola Inc.................................. 017674
Motorola Inc.................................. 017675
Motorola Inc.................................. 017676
Motorola Inc.................................. 017677
Motorola Inc.................................. 017678
Motorola Inc.................................. 017679
Motorola Inc.................................. 027417
Motorola Inc.................................. 033374
Motorola Inc.................................. 033402

- --------------------------------------------------------------------------------

Tuxedo License Agreement   -Novell, Inc. -122 East 1700 South -Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9    PAGE 38                  January 24, 1996

<PAGE>

  [***]    ................................... 034282-01
Novell, Inc. ................................. 034252
Novell, Inc. ................................. 034268
Novell, Inc. ................................. 034269
Novell, Inc. ................................. 034270
Novell, Inc. ................................. 034271
  [***]                           ............ 034300-01
  [***]                        ............... 006131
  [***]                        ............... 006147
  [***]                        ............... 006149
  [***]                        ............... 007841
  [***]                        ............... 007843
  [***]                        ............... 021347
  [***]                        ............... 024005
  [***]                        ............... 025253
  [***]                        ............... 025254
  [***]                        ............... 025255
  [***]                        ............... 025304
  [***]                        ............... 027227
  [***]                        ............... 027356
  [***]                        ............... 027359
  [***]                        ............... 032557
  [***]                        ............... 032558
  [***]                        ............... 032696
  [***]                        ............... 034233-01
  [***]                        ............... 034279-01
Oracle Corporation ........................... 030331
Oracle Corporation ........................... 030341
Pacific Bell ................................. 034230-01
  [***]          ............................. 034019-01
  [***]          ............................. 034018-01
  [***]                 ...................... APREF-1
  [***]                 ...................... APREF-2
  [***]          ............................. 034049-02
  [***]          ............................. 034049-03
  [***]                     .................. 034567-01
Pyramid Tech Corporation ..................... 000082
Pyramid Tech Corporation ..................... 000483
Pyramid Tech Corporation ..................... 000883
Pyramid Tech Corporation ..................... 001069
Pyramid Tech Corporation ..................... 007890
Pyramid Tech Corporation ..................... 007891
Pyramid Tech Corporation ..................... 017343
Pyramid Tech Corporation ..................... 018390
Pyramid Tech Corporation ..................... 027398
Pyramid Tech Corporation ..................... 028470
Pyramid Tech Corporation ..................... 029575
Pyramid Tech Corporation ..................... 030545
Pyramid Tech Corporation ..................... 033290
Pyramid Tech Corporation ..................... 033293
  [***]      ................................. Apref-3
  [***]                    ................... 028493
  [***]                    ................... 030543
  [***]                    ................... 034890-01
Sequent Computer Systems, Inc. ............... 000347
Sequent Computer Systems, Inc. ............... 000852
Sequent Computer Systems, Inc. ............... 001744
Sequent Computer Systems, Inc. ............... 002989
Sequent Computer Systems, Inc. ............... 003267
Sequent Computer Systems, Inc. ............... 004309
Sequent Computer Systems, Inc. ............... 011758
Sequent Computer Systems, Inc. ............... 011759
Sequent Computer Systems, Inc. ............... 012237
Sequent Computer Systems, Inc. ............... 015203
Sequent Computer Systems, Inc. ............... 015872
Sequent Computer Systems, Inc. ............... 016373
Sequent Computer Systems, Inc. ............... 017437
Sequent Computer Systems, Inc. ............... 017438
Sequent Computer Systems, Inc. ............... 018919
Sequent Computer Systems, Inc. ............... 027474
Sequent Computer Systems, Inc. ............... 029580
Sequent Computer Systems, Inc. ............... 029598
Sequent Computer Systems, Inc. ............... 029809
Sequent Computer Systems, Inc. ............... 033323
Sequent Computer Systems, Inc. ............... 033370
 [***] ....................................... 000403
 [***] ....................................... 009412
 [***] ....................................... 011634
 [***] ....................................... 033331
 [***] ....................................... 034110-01
 [***] ....................................... 034429-01
 [***] ....................................... 034430-01
 [***] ....................................... 034437-01
 [***]     ................................... 001258
 [***]     ................................... 009942
 [***]     ................................... 018417
 [***]     ................................... 027488
 [***]     ................................... 027489
 [***]     ................................... 029809
 [***]     ................................... 005208
 [***]     ................................... 032737
 [***]     ................................... 034136-01
 [***]                        ................ 034414-01
 [***] ....................................... 005549
 [***] ....................................... 006497
 [***] ....................................... 034286-01
Sun Microsystems, Inc. ....................... 002325
 [***]                        ................ 000835
 [***]                        ................ 033252
 [***]                        ................ 034267-01
 [***]                        ................ 034541-01
 [***]                        ................ 034958-01
Tandem Computers Incorporated ................ 002324
Tandem Computers Incorporated ................ 010355
Tandem Computers Incorporated ................ 010356
Tandem Computers Incorporated ................ 010357
Tandem Computers Incorporated ................ 010358
Tandem Computers Incorporated ................ 019202
Tandem Computers Incorporated ................ 028015
Tandem Computers Incorporated ................ 028543
Tandem Computers Incorporated ................ 029595
Tandem Computers Incorporated ................ 030556
Tandem Computers Incorporated ................ 033366
Tandem Computers Incorporated ................ 034276-01

- --------------------------------------------------------------------------------

Tuxedo License Agreement   -Novell, Inc. -122 East 1700 South -Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9    PAGE 39                  January 24, 1996

<PAGE>

  [***]              . . . . . . . . . . . . . . . . . . . . . . . . . 034848-01
  [***]              . . . . . . . . . . . . . . . . . . . . . . . . . 034852-01
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034740-01
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034744-01
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034750-01
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034751-01
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034753-01
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034754-01
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034376-01
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 003040
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 003552
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 008700
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 009638
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 010396
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 011482
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 012470
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 019659
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 028060
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 029581
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 033324
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 033325
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 009083
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 027350
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 032552
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 000122
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 001218
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 003052
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 009891
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 028559
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 013224
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034152-01
  [***]            . . . . . . . . . . . . . . . . . . . . . . . . . . 029815
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 010912
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 011361
  [***]  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 024028
  [***]        . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034413-01
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 000395
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 000988
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 001314
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 001314
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 001739
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 003009
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 007809
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 007810
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 007811
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 009620
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 009657
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 011015
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 012446
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 012450
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 012451
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 012458
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 012459
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 014146
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 014147
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 014959
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 014965
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 015526
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 016465
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 017863
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 029586
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 033330
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 034931-01
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 034935-01
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 034941-01
Unisys Corporation   . . . . . . . . . . . . . . . . . . . . . . . . . 034942-01
  [***]                                      . . . . . . . . . . . . . 034278-01
  [***]                                                              . 033258
  [***]                                                              . 034033-01
  [***]                                                              . 034399-01
  [***]                                                            . . 034402-01
  [***]                                                              . 034404-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034162-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034326-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034327-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034328-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034329-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034375-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034593-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034595-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034596-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034598-01
  [***]                  . . . . . . . . . . . . . . . . . . . . . . . 034536-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034696-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034697-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034698-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034699-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034700-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034702-01
  [***]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 034703-01

                  SECTION 2 - TUXEDO CONTRACTS EXECUTED FROM PROVO

Customer Name                                     Contract ID
- -------------                                     -----------

AT&T                                              MLA
Bell Atlantic Network Services                    MLA
Pacific Bell                                      MLA
Southwestern Bell Mobile Systems                  MLA

- --------------------------------------------------------------------------------

Tuxedo License Agreement     -Novell, Inc.-122 East 1700 South-Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9  PAGE 40                    January 24, 1996

<PAGE>

  [***]                                           MLA
Mckesson                                          MLA
  [***]                                           MLA
Ameritech Communications                          MLA
Discover Card                                     MLA
Union Bank of Switzerland                         MLA
  [***]                                           MLA
  [***]                                           MLA
  [***]                                           MLA
EDS/General Motors                                MLA
  [***]                                           MLA


             SECTION 3 - TUXEDO CONTRACTS EXECUTED FROM SAN JOSE

Customer Name                                     Contract ID
- -------------                                     -----------

  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
Pyramid Technology                                Binary OEM Agreement
  [***]                                           Binary OEM Agreement
Tandem Chile S.A.                                 Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
Independence Technologies                         Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
Digital Equipment Corporation                     Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement
  [***]                                           Binary OEM Agreement


           SECTION 4 - TUXEDO CONTRACTS EXECUTED BY NOVELL KK

Customer Name                                     Contract ID
- -------------                                     -----------

Fujitsu                                           Source Code Agreement
NEC                                               Source Code Agreement
  [***]                                           Source Code Agreement
  [***]                                           Source Code Agreement
  [***]                                           Source Code Agreement
NTT Data                                          Source Code Agreement
  [***]                                           Source Code Agreement
Nihon Unisys                                      Source Code Agreement


- --------------------------------------------------------------------------------

Tuxedo License Agreement     -Novell, Inc.-122 East 1700 South-Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9  PAGE 41                    January 24, 1996

<PAGE>


                          SECTION 5 - TUXEDO CONTRACTORS

Contractor                           Company                        Contract ID
- ----------                           -------                        -----------
[        ]                           J. Anthony & Assocs.           P.O. 56805
[        ]                           Altair Consulting Group        P.O. 56804
[        ]                           Pencom Systems                 P.O. 57364
[        ]                           Pencom Systems                 P.O. 56012


                         SECTION 6 - SERVICES AGREEMENTS


Contractor                                   Contract ID
- -------------                                -----------

[       ]                                    Data Processing Services Agreement
[       ]                                    Master Business Agreement

                          SECTION 7 - EXCLUDED CONTRACTS

No Novell agreements with Decision Support, Inc. ("DSi") relating to TUXEDO 
documentation will be considered Assumed Contracts, and no such agreements are 
assigned under this Agreement.











- --------------------------------------------------------------------------------

Tuxedo License Agreement     -Novell, Inc.-122 East 1700 South-Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9  PAGE 42                    January 24, 1996


<PAGE>
Exhibit C: Subsidiaries & Controlled Persons(1)


Wholly-Owned Subsidiaries
- -------------------------

1.   Information Management Company, a Delaware corporation ("IMC")

2.   Independence Technologies, Inc., a Delaware corporation ("ITI")

3.   Aquabay Limited, a UK corporation (name being changed to BEA Systems
Limited)

4.   BEA International Limited, a Cayman Islands corporation (in the process of
being formed)






_______________________________

1  Additional entities may be added to this Exhibit upon the mutual agreement
of the parties.

- --------------------------------------------------------------------------------

Tuxedo License Agreement     -Novell, Inc.-122 East 1700 South-Provo, Utah 84606
C:\WORK\WPFILES\MERGERS\BEA-LIC.DR9  PAGE 43                    January 24, 1996

<PAGE>

Exhibit D:  Transferred Assets


Novell and BEA shall agree upon a detailed list of the Transferred Assets and
their respective values within thirty (30) days after the Closing Date.

1.   The equipment, furnishings, and other personal property owned by Novell
     and used exclusively by its TUXEDO division personnel.  This will include,
     without limitation, all computer and office equipment, software
     (development tools, personal productivity software, PC software, etc.),
     desks and other furniture, and other personal property owned by Novell and
     located in the TUXEDO division personnel offices in Florham Park, New
     Jersey.  Novell shall also allow BEA to continue to use the Florham Park,
     New Jersey office space currently used by the TUXEDO division personnel
     without charge until August 31, 1996, or until BEA vacates the space,
     whichever occurs first.  In the event that BEA vacates the space and
     Novell wishes to sublease or otherwise utilize the space with the existing
     desks and other office furniture, Novell will pay to BEA $150,000 for the
     furniture.

2.   Novell's ownership in USL Mexico (40% of outstanding shares) and USL SA
     (10% of outstanding shares).

3.   All accounts receivable and outstanding loan amounts due to Novell by, or
     otherwise relating to, USL Mexico (approximately $450,000 to $500,000 in
     accounts receivable) and USL SA (approximately $2,400,000 to $2,700,000 in
     accounts receivable and $305,000 as a loan).

4.   Inventory, which BEA can sell during a 90-day transition period after
     Closing, provided that BEA reasonably identifies itself as the seller to
     the purchaser through the use of inventory stickers or some other
     mechanism.

- --------------------------------------------------------------------------------

Tuxedo License Agreement     -Novell, Inc.-122 East 1700 South-Provo, Utah 84606
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<PAGE>

Exhibit E:  TUXEDO Trademark Licenses

Novell and BEA each acknowledge and agree that this list of licensees of TUXEDO
trademarks may not be complete, and that BEA has not had the opportunity prior
to Closing to review all of the listed Assumed Contracts which may grant such
trademark rights.  Accordingly, Novell and BEA shall attempt in good faith to
resolve any issues that may arise regarding any omissions or other problems
with this list.

Tandem
DG
Bull
ICL
- --------------------------------------------------------------------------------

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<PAGE>


Exhibit F:  Source Code Sublicensing

BEA may grant sublicenses of Source Code subject to the following minimum terms
and conditions:

1.   Subject to Section 23, BEA may grant sublicenses to Source Code for the
     purposes specified in Section 4. 1. Such Source Code shall continue to be
     subject to the terms and conditions of this Agreement.  Sublicensees may
     only make those number of copies of Source Code as reasonably necessary
     for backup and archival purposes.

2.   Sublicensees may modify Source Code to create Derivative Works, provided
     the Derivative Works are for the purposes stated in Section 4. 1. All
     Derivative Works created by sublicensees shall continue to be subject to
     the terms and conditions of this Agreement.

3.   Except for source code escrow or similar arrangements to allow limited use
     of Source Code or Derivative Works thereof for maintenance purposes,
     sublicensees of Source Code shall not be authorized to sublicense Source
     Code or Derivative Works thereof, except that in the case of the latter,
     sublicensees shall be permitted to grant Binary Code sublicenses pursuant
     to a grant of rights from BEA.

4.   BEA, upon the written request of Novell, shall provide Novell with the
     names of its sublicensees and the locations of each copy of the Source
     Code and Derivative Works thereof.

5.   Sublicensees of Source Code shall be subject to confidentiality provisions
     at least as stringent as those specified in this Agreement with respect to
     Source Code.

6.   Novell shall not be liable to any sublicensees of BEA for any reason
     whatsoever, and BEA agrees to indemnify Novell from and against any
     imputed liability of BEA.

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<PAGE>

Exhibit G:  Form of Guaranty

                                   GUARANTY

     This Guaranty ("Guaranty"), dated as of _______________, 199_, is by
Warburg, Pincus Ventures, L.P. as guarantor     ("Guarantor"), for the 
benefit of Novel], Inc. ("Novell").

RECITALS:
- --------

     A.   Novell and BEA Systems, Inc. ("BEA") have entered into that certain
TUXEDO License and Distribution Agreement, dated__________, 1995 (the
"Agreement"), pursuant to which Novell has agreed to grant to BEA certain
exclusive and strategic rights with respect to Novell's TUXEDO software, in
consideration of the payments and other agreements and obligations of BEA
described therein.  Execution of this Guaranty is a condition to the closing of
the Agreement.

     B.   Guarantor has a substantial financial interest in BEA and will
materially benefit from the transaction contemplated by the Agreement.

AGREEMENTS:
- ----------

     NOW, THEREFORE, in consideration of the foregoing, Guarantor hereby agrees
as follows:

     1.   PERSONAL GUARANTY.  To induce Novell to enter into the transaction 
with BEA described above, Guarantor hereby personally, absolutely and 
unconditionally guarantees performance of all obligations of BEA to make 
payments to Novell, as more specifically described in the Agreement, as it 
may be amended from time to time with the consent of BEA (the "Obligations"). 
 The parties acknowledge that, unless and until BEA delivers to Novell a 
written notice that BEA is exercising its option to purchase a perpetual 
license, pursuant to Section 14.2 of the Agreement, such option payment is 
not considered an obligation of BEA to make a payment to Novell.  This 
Guaranty is an unconditional, continuing and irrevocable guaranty of payment 
of the Obligations as agreed.  The liability of Guarantor hereunder is 
independent of the Obligations and of the liabilities of BEA.

     2.   REPRESENTATIONS, WARRANTIES AND COVENANTS.  Guarantor hereby 
represents, warrants, covenants and agrees that, upon BEA's failure to 
perform when due any of the Obligations, Guarantor shall pay to Novell, upon 
demand, the unpaid amount of such Obligation.  Guarantor agrees, as principal 
obligor and not as guarantor only, to pay to Novell upon demand all costs and 
expenses (including reasonable attorneys' fees) incurred or expended by 
Novell in connection with the enforcement of this Guaranty.

     3.   WAIVERS.  In connection with this Guaranty, Guarantor hereby waives 
the following:

          3.1  Any right to require Novell to first proceed against BEA or 
any other person, or to proceed against or exhaust any security held by 
Novell at any time, or to pursue any other remedy in its power before 
proceeding against Guarantor;

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<PAGE>

          3.2  All requirements, if any, of diligence, presentment, demand, 
protest, notice of default and non-payment and all other demands and notices 
of any kind with respect to the Obligations, to the extent permitted by law;

          3.3  Any defense due to unenforceability or irregularity with 
respect to the Obligations or any limitation of BEA's liability with respect 
to the Obligations, or based upon an election of remedies by Novell;

          3.4  Any duty of Novell to disclose to Guarantor any facts it may 
now or hereafter know about BEA, regardless of whether Novell has reason to 
believe that such facts are unknown to Guarantor or materially increase the 
risk beyond that which Guarantor intended to assume.  Guarantor agrees that, 
due to its close relationship with BEA, Guarantor assumes full responsibility 
for keeping informed of all circumstances affecting the risk of 
nonperformance; and

          3.5  All other statutory or common law suretyship defenses now or 
hereafter available.

     4.   CONSENTS.  Guarantor hereby consents to the following and agrees 
that this Guaranty will not be affected thereby:

          4.1  Any modification, renewal, extension or release of the 
Obligations, including without limitation any extension of time for 
performance or payment, any delay in the enforcement of Novell's rights, and 
any modification of any duty or obligation of BEA;

          4.2  Waiver by Novell of performance or payment of damages by BEA 
with respect to any or all of the Obligations, or assignment by Novell of its 
rights under the Obligations; and

          4.3  Acceptance of any property as security, release of any 
property from any security interest held by Novell, or the addition of or 
release of any other guarantor of the Obligations.

     5.   BANKRUPTCY, ETC.  The guarantees contained herein shall not be 
affected by bankruptcy, insolvency, receivership, reorganization or similar 
proceeding affecting BEA or its assets, or by the voluntary or involuntary 
liquidation, sale or other disposition of all or substantially all of the 
assets of BEA.

     6.   SUBROGATION RIGHTS AND SUBORDINATION.  Until all Obligations are 
paid in full, Guarantor agrees that it shall have no right of subrogation 
against BEA and waives any rights to enforce any remedy that Novell may have 
against BEA and any right to participate in any security that may be held by 
Novell.  Guarantor agrees that all indebtedness of BEA to Guarantor, whether 
now or hereafter incurred, shall be subordinated in all respects to all 
Obligations hereby guaranteed.

     7.   ACTIONS.  Guarantor's obligations under this Guaranty are 
independent of the Obligations of BEA and, if them is a default or breach by 
Guarantor hereunder, a separate action or actions. may be brought and 
prosecuted against Guarantor whether or not BEA is joined in such action or a 
separate action is brought against BEA.  Novell may maintain successive 
actions for other defaults.  All rights and remedies of Novell shall be 
cumulative and not alternative, and such rights and remedies shall be in 
addition to all rights and remedies given to Novell by law.  Novell's rights 
shall not be exhausted by its

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<PAGE>


exercise of any of its rights or remedies or by any action or successive 
action until all Obligations hereby guaranteed have been performed as agreed 
or Novell has been fully compensated for any failure to adequately perform.  
In any action against Guarantor based upon a default under or breach of this 
Guaranty, Novell shall be entitled to recover As costs and reasonable 
attorneys' fees.

     8.   TERMINATION OF GUARANTY.  This Guaranty shall terminate at the time
all Obligations of BEA relating to the Initial Term are satisfied in full;
provided, however, that in the event of a public offering of BEA stock in which
BEA obtains at least $50 million in equity investments, and BEA creates and
maintains an interest-bearing escrow account holding at least fifty percent
(50%) of the amount of outstanding financial obligations of BEA during the
Initial Term, Novell agrees to terminate this Guaranty and release Guarantor
from its obligations hereunder, effective at the time BEA delivers to Novell
reasonably satisfactory evidence that such minimum funds have been obtained
from a public offering and the escrow account has been formed and fully funded.

     9.   BINDING EFFECT; ASSIGNABILITY.  This Guaranty shall inure to the 
benefit of and shall be binding upon Novell and Guarantor and their 
respective successors, representatives, heirs, executors, administrators and 
assigns.  Guarantor may not assign this Guaranty without Novell's prior 
written consent.

    10.   ENTIRE AGREEMENT; AMENDMENT.  This writing constitutes the entire 
agreement of Guarantor with respect to the subject matter of this Guaranty 
and may not be modified, amended or terminated except by a written agreement 
specifically referring to this Guaranty signed by Guarantor and Novell.

    11.  NO WAIVER.  No waiver of any breach or default under this Guaranty 
shall be considered valid unless in writing and signed by the party giving 
such waiver.

    12.  APPLICABLE LAW.  This Guaranty and all amendments hereof shall be 
governed by and construed in accordance with the laws of the State of Utah, 
without regard to conflicts of laws provisions.

    13.  SEVERABILITY.  If any term of this Guaranty is deemed invalid or 
unenforceable by a court or authority of competent jurisdiction, that term 
shall be reduced or otherwise modified by such court or authority, but only 
to the minimum extent necessary to make it valid and unenforceable.  If any 
term cannot be reduced or modified to make it reasonable and permit its 
enforcement, such term shall be severed from this Guaranty and the remaining 
terms shall be interpreted in such a way as to give maximum validity and 
enforceability to this Guaranty.

                                   GUARANTOR:

                                   WARBURG, PINCUS VENTURES, L.P.

                                   By:
                                      -------------------------------
                                   Title:
                                         ----------------------------

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<PAGE>



Exhibit H: TUXEDO Employees

   [***]






















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<PAGE>

Exhibit I:  Form of Bill of Sale

                     BILL OF SALE AND ASSIGNMENT OF ASSETS


     Novell, Inc., a Delaware corporation ("Novell"), in consideration of Ten 
Dollars and other good and valuable consideration to it in hand paid, the 
receipt and sufficiency of which is hereby acknowledged, does hereby sell, 
grant, transfer, convey, assign, and deliver unto BEA Systems, Inc., a 
Delaware corporation ("BEA"), all of Novell's right, title and interest in 
and to each of the Transferred Assets, as such term is defined in that 
certain TUXEDO License and Distribution Agreement between BEA and Novell, 
dated as of January 24, 1996 and amendments thereto (together, the 
"Agreement").

     Novell represents and warrants to BEA that (i) Novell is the lawful 
owner of title to the Transferred Assets, (ii) Novell has the right to sell 
the Transferred Assets to BEA, and (iii) there are no liens or encumbrances 
on or against the Transferred Assets, except for those encumbrances and 
liabilities described in the Agreement or documents related thereto.

     Novell shall execute, acknowledge and deliver all such further deeds, 
bills of sale, transfers, assignments, conveyances, powers of attorney, 
conveying and confirming unto BEA the Transferred Assets, as BEA shall 
reasonably require.

     IN WITNESS WHEREOF, Novell has caused this instrument to be executed as 
of February 23, 1996.

                                   NOVELL, INC.

                                   By:
                                      ------------------------------
                                   Its:
                                       -----------------------------


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<PAGE>

Exhibit J:  Sample Initial Press Release

APPROVAL DRAFT, 1/23

                                       
 NOVELL AND BEA SYSTEMS ANNOUNCE STRATEGIC PARTNERSHIP TO DEVELOP, DISTRIBUTE
                            TUXEDO SOFTWARE

     RESPONDING TO GROWING MARKET DEMAND, COMPANIES TO ENHANCE AND EXPAND
               TUXEDO SYSTEM ACROSS NETWARE, UNIX, NT PLATFORMS

     OREM, UT AND SUNNYVALE, CA -- JANUARY 29,1996 -- Novell, Inc. (NOVL) and
BEA Systems, Inc. of Sunnyvale, CA. today announced a strategic partnership to
develop and distribute the TUXEDO System, the leading open transaction
management software used by businesses to develop and deploy multi-tier,
client/server applications.

     The TUXEDO System is a development, management and deployment 
environment for multi-tier client/server applications and is the leading 
portable transaction manager with more than 40 percent of the market.  It is 
used to create scalable, high performance, secure, reliable business-critical 
applications, as well as more general purpose client/server applications.  It 
runs on more than 35 platforms including NetWare, most UNIX variants, NT, and 
virtually every client operating environment.  Customer demand for the TUXEDO 
System has doubled for the past two consecutive years.

     Under the terms of the agreement, both companies will invest development 
resources to enhance and expand the TUXEDO product line.  Novell's 
development focus will be to integrate TUXEDO with NetWare, including its 
industry standard network directory services (NDS), and NetWare Connect 
Service for managed Internet services.  BEA will be responsible for 
developing the features and utilities needed for enterprise line-of-business 
solutions running on UNIX, NT, and other platforms, including their 
integration with existing legacy systems. BEA will also become the master 
distributor of TUXEDO on non-NetWare platforms.

     The partnership advances Novell's strategy to enable a Smart Global
Network by extending distributed network services such as TUXEDO's on-line
transaction processing (OLTP) capabilities across multiple client and server
platforms and into managed Internet solutions.  Through the further integration
of TUXEDO with NetWare, Novell will enable customers to more easily manage and
secure transaction-intensive applications deployed across networks for use in
electronic commerce, securities trading, manufacturing process control, retail
inventory management, and other mission-critical areas.

     Since traditional TUXEDO users on UNIX or NT develop custom line-of-
business solutions, Novell chose to partner with BEA because they will dedicate
the resources required from both a consulting and channel perspective, as well
as a product-features perspective to better meet these customer-specific needs.

     "Our partnership with BEA Systems enables Novell to maintain its
commitment to TUXEDO and its rapidly expanding customer base while increasing
Novell's focus to making TUXEDO services an integral part of the Smart Global
Network spanning from workgroup LANs to the Internet," said Richard King,
executive vice president and general manager of the Novell Systems Group.  'As
a leader in enterprise middleware solutions, BEA Systems is the ideal partner
to fully support TUXEDO market growth among its base of enterprise and systems
customers.  Novell believes the agreement will widen TUXEDO's market lead as
the platform for open transaction intensive client/server applications."


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<PAGE>

     "We are extremely pleased to be working with Novell to expand both 
TUXEDO's capabilities and its distribution," said Bill Coleman, President and 
CEO of BEA Systems.  "We already have broad TUXEDO expertise within BEA, a 
large installed base of TUXEDO customers, and are focusing our entire company 
on enterprise middleware solutions with TUXEDO as a core technology 
component. We expect this partnership to allow us to drive significant 
enhancements into the product, and to ease the path for customers adopting 
TUXEDO by greatly expanding sales channels and consulting availability."

     Jim Johnson, President of the Standish Group, an industry consulting 
firm specializing in transaction management middleware, said, "This 
relationship provides the best of all worlds.  Multi-tier client/server 
application customers get the features and consulting they need from the 
consulting intensive channel to be so up by BEA.  At be same time, TUXEDO 
will be better integrated and more easily useable in a NetWare or Novell 
distributed services environment, and will be used to enhance the 
capabilities of the products that make that environment possible."

     The joint development and master distributor agreement with BEA is 
effective as of February 26, 1996.  Current Novell TUXEDO distributors and 
customers have already been notified of the agreement.  Any distributor or 
customer transitions will be accomplished within 90 days.

ABOUT BEA

     BEA Systems is a leading provider of enterprise middleware solutions. 
Founded in 1995, BEA's mission is to deliver a distributed application 
framework, using enhanced transaction processing monitor technology and 
professional services, to enable distributed mission-critical applications 
that can seamlessly work with both legacy and client/server environments.  
With today's announcement, BEA will be the developer and master distributor 
of TUXEDO on all operating systems other than NetWare and plans to continue 
building its solution set through development, partnerships, and 
acquisitions. Headquartered in Sunnyvale, Calif., BEA is venture funded by 
Warbug, Pincus Ventures, L.P.

     Novell, Inc. (NASDAQ: NOVL), is the world's leading networking software
provider.  Novell software provides the infrastructure for a networked world, 
enabling our customers to connect with other people and the information they 
need, anytime and anyplace.  Novell partners with other technology and market 
leaders to help customers make networks a part of their everyday lives.

                                      ###
                                       


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<PAGE>
                               SECOND AMENDMENT
                                      TO
                   TUXEDO LICENSE AND DISTRIBUTION AGREEMENT

     This second amendment (this "Amendment") is entered into as of October 25,
1996, ("Amendment Date") between Novell, Inc., a Delaware corporation with a
place of business at 122 East 1700 South, Provo, Utah 84606 ("Novell"), and BEA
Systems, Inc., a Delaware corporation with its principal place of business
located at 385 Moffett Park Drive, Sunnyvale, California 94089 ("BEA").

                                   RECITALS

     A.   Novell and BEA entered into a TUXEDO License and Distribution
Agreement, dated effective January 24, 1996 (the "Distribution Agreement"),
with the closing on February 23, 1996.  All capitalized terms used herein and
not defined herein shall have the respective meanings specified in the
Distribution Agreement.

     B.   The Distribution Agreement was amended in a First Amendment dated 
as of February 23, 1996 (the "First Amendment").  The parties now desire to 
further amend the Distribution Agreement as hereinafter provided.

     NOW, THEREFORE, in consideration of the promises included herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

                                   AGREEMENT

1.   PAYMENTS.  In recognition of the renegotiated terms and conditions set 
forth herein including the restructuring of payment amounts and schedules, 
the Distribution Agreement is modified as follows:

     a.   Section 13.1 of the Distribution Agreement is amended as follows:

               BEA will pay to Novell an additional $10.55 million
               for Year 1 of the Initial Term, with the additional amount due
               and payable within 180 days of the Amendment Date.  This $10.55
               million figure is derived as follows:

                    i)   $9.55 million associated with the
                         renegotiation of the Distribution Agreement pursuant
                         to this Amendment, in recognition of the increased
                         current value to BEA of the amended Distribution
                         Agreement; plus

                   ii)   $1.0 million for settlement in full of Novell's claim
                         of

Second Amendment                           1

<PAGE>

                         royalties past due by ITI, an entity which has since
                         been acquired by BEA; less

                  iii)   [***]

     b.   Novell will pay BEA two million five hundred fifty thousand dollars
          ($2,550,000) associated with Novell's compensation of BEA for
          Novell's retention of Japanese TUXEDO Software revenues accrued
          during the period from February 23, 1996 to July 31, 1996, with this
          amount due and payable within fifteen (15) days of receipt of notice
          from BEA that BEA Japan has received the Japanese TUXEDO Software,
          provided such notice is given within one hundred eighty (180) days of
          the Amendment Date.

     c.   The one-time payment of $25 million in Section 14.2 of the
          Distribution Agreement, which was reduced to $24 million in the First
          Amendment, is further reduced to $12 million.

2.   TUXEDO TRADEMARK.  Section 12.2 of the Distribution Agreement is amended 
     so that the attribution notice is as follows: "TUXEDO is a registered 
     trademark in the United States and other countries."

3.   PAST TUXEDO REVENUES.  Delete the last two sentences of Section 18.1 of
     the Distribution Agreement and replace with the following:

          The Transferred Assets do not include, and BEA is not entitled
          to, revenues relating to the TUXEDO Software that were recognized or
          collected by Novell as revenue prior to February 23, 1996, or amounts
          that relate to distribution of the NetWare version of the TUXEDO
          Software as permitted by the Distribution Agreement.  Upon Novell's
          request, BEA shall use commercially reasonable efforts to assist
          Novell in the collection of any unpaid amounts associated with TUXEDO
          Software revenues recognized by Novell as such prior to February 23,
          1996.  These efforts shall include, but not be limited to, joint
          correspondence to,

Second Amendment                             2

<PAGE>
          telephone calls with, and visits to the sites of customers
          associated with such unpaid amounts.  Novell acknowledges that Novell
          has assigned to BEA all other revenues relating to the TUXEDO
          Software, no matter when the revenues accrued, and Novell waives any
          right to collect such revenues during the term of the Distribution
          Agreement.  During the term of the Distribution Agreement Novell will
          not, under any circumstances, invoice, investigate, audit or collect
          any such revenues, nor assert any right to do so, except to the
          extent that such collection actions or revenues relate to
          distribution of the NetWare version of the TUXEDO Software as
          permitted by the Distribution Agreement.  At BEA's request, Novell
          will promptly send a letter to each TUXEDO Software licensee
          informing them of the assignment to BEA of their TUXEDO Software
          license and all future revenues related thereto.  Upon BEA's request,
          Novell will provide to BEA accurate and complete records concerning
          any amounts relating to the TUXEDO Software recognized as revenue by
          or on behalf of Novell after February 23, 1996, and promptly pay
          those amounts to BEA.

4.   INTEGRATION OF TUXEDO SOFTWARE WITH NDS.  Novell acknowledges that BEA is
     not in breach of any of its obligations with respect to the development
     work, or the preparation of the Statement of Work, described in
     Section 8.3, and that the deadline for executing the Statement of Work is
     extended for a period of sixty (60) days from the Amendment Date, and that
     the Statement of Work will contain reasonable milestones and dates to
     complete the contemplated work.  In addition, Novell and BEA have agreed on
     a basic framework under which BEA would agree to take over the development
     of the NetWare version of the TUXEDO Software, if Novell wishes BEA to do
     so pursuant to Section 10.2 of the Distribution Agreement.  Under this
     framework, Novell would compensate BEA in the form of NRE, loan or other
     up-front assistance with development and support costs for BEA, offset by
     ongoing royalties paid back to Novell as BEA markets and sells the
     product.

5.   USL MEXICO RECEIVABLES.


     a.   BEA acknowledges that in consideration of the renegotiated terms
          of the Distribution Agreement set forth herein, BEA shall not receive
          Novell's shares of stock in USL System Laboratories de Mexico S.A. de
          C.V. ("USL Mexico") as identified in Exhibit D of the Distribution
          Agreement, and that such shares are hereby deleted from the
          definition of Transferred Assets set forth in Section 2.25.

     b.   Novell and BEA will use commercially reasonable efforts to enter
          into an agreement with Asytec providing that all obligations of
          Novell under the JVA, as well as any obligations relating to the JVA
          that were assigned to BEA by Novell under the Distribution Agreement,
          are thereby terminated.

     c.   BEA shall offer to and negotiate with USL Mexico, and exercise
          commercially

Second Amendment                           3

<PAGE>

          reasonable efforts to conclude, BEA's standard non-exclusive
          TUXEDO distribution agreement, a copy of which is attached hereto as
          Exhibit A, according to the following:

          i.   the term of the agreement shall be three (3) years;

          ii.  the discount rate shall be [***] off BEA's current
               Quantity One list price during the the first year of the
               agreement, and during the second and third years the discount
               rate shall be renegotiated but shall be at least[***] off BEA's
               current Quantity One list price;

          iii. the discount rate for the second and third year shall remain at
               [***] if:

               (1)  USL Mexico meets minimum annual revenue totals payable to
                    BEA of [***] in the first year and [***] in the
                    second year; or

               (2)  USL Mexico agrees to make an up-front, non-refundable
                    prepayment of revenue to BEA of [***] per year for the
                    second and third years;

          iv.  BEA shall not be obligated to maintain such discount
               rates if USL Mexico and/or its parent Asytec have not, within
               one hundred eighty (180) days of the Amendment Date, satisfied
               the approximately [***] accounts receivable balance owed by USL
               Mexico to BEA as Novell's successor to this receivable; and,

           v.  all other terms shall be at least as favorable as those of
               BEA's standard TUXEDO distribution agreement, attached hereto as
               Exhibit A.

6.   JAPAN.  Within five (5) business days of the Amendment Date, Novell and 
BEA will execute, and will facilitate execution by their respective Japanese 
subsidiaries, the Japanese TUXEDO Agreement attached as Exhibit B.

7.   MARKETING AND SALES REQUIREMENTS.

     a.   Novell and BEA agree that it is in both companies' best
          interests that the market for the TUXEDO Software be preserved and
          expanded.  BEA acknowledges that the development, marketing, sales
          and support of the TUXEDO Software is BEA's primary business, and BEA
          commits that it will continue to be BEA's primary business during the
          Initial Term of the Distribution Agreement.  BEA

Second Amendment                               4

<PAGE>

          further commits that it will use commercially reasonable efforts
          to actively market TUXEDO Software for those markets to which BEA has
          been granted distribution rights by Novell under the Distribution
          Agreement.

     b.   Section 8.2 of the Distribution Agreement is deleted.  However, BEA
          acknowledges that this in no way releases BEA from its obligations to
          pay Novell all licensing fees described in Section 13 and 14 of the
          Distribution Agreement.

8.   ENTIRE AGREEMENT.  This Amendment (including any attached Exhibits), 
together with the Distribution Agreement (including the First Amendment), 
constitutes the entire agreement between the parties with respect to the 
subject matter hereof.

9.   EFFECT OF AMENDMENT.  Except as modified by this Amendment, all terms 
and conditions of the Distribution Agreement shall remain in full force and 
effect.

10.  COUNTERPARTS.  This Agreement may be executed in any number of 
counterparts, all of which shall constitute together one and the same 
agreement.

     Each of the undersigned represents and warrants that he or she is duly
authorized to sign this Amendment on behalf of the party he or she represents.
Each party has read, understands and agrees to the terms and conditions of
this Amendment.

NOVELL, INC.                  BEA SYSTEMS, INC.

By: /s/ Mary Burnside              By: /s/ Edward W. Scott, Jr.
   --------------------               --------------------------

Name:  Mary Burnside               Name: /s/ Edward W. Scott, Jr.
     ------------------                 --------------------------

Title:  Exec. Vice President       Title: Executive Vice President
      ----------------------             --------------------------



Second Amendment                             5

<PAGE>

                                   EXHIBIT A
                  BEA STANDARD TUXEDO DISTRIBUTION AGREEMENT




Second Amendment                              6

<PAGE>

                               BEA SYSTEMS, INC.
                            DISTRIBUTION AGREEMENT
                                  COVER SHEET

     This Distributor Agreement ("Agreement") is made by and between BEA
Systems, Inc. ("BEA") and the authorized distributor identified below
("Distributor") as of ___________  199__  ("Effective Date").

     This Agreement consists of this Cover Sheet, the attached Terms and
Conditions and the attached Exhibits hereto.

     Each of the undersigned represents and warrants that he or she is duly
authorized to sign this Agreement on behalf of the party he or she represents.
Each party has read, understands and agrees to the terms and conditions of this
Agreement.

BEA SYSTEMS, INC.                  [DISTRIBUTOR]

By:                                   By:
   ------------------------              ----------------------
         [signature]                          [signature]

Name:                                 Name:
     ----------------------                --------------------
         [print name]                          [print name]

Title:                                Title:
      ---------------------                 -------------------

Date:                                 Date:
     ----------------------                --------------------

Address:                              Address:

- ---------------------------           -------------------------

- ---------------------------           -------------------------

Attention:                            Attention:
          -----------------                     ---------------
Phone:                                Phone:
      ---------------------                 -------------------
Fax:                                  Fax:
    -----------------------               ---------------------







- -------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                 1                 BEA CONFIDENTIAL


<PAGE>

                               BEA SYSTEMS, INC.
                        STANDARD DISTRIBUTION AGREEMENT

                             TERMS AND CONDITIONS

The Agreement authorizes Distributor to acquire BEA Products from BEA and
market them directly to End Users.  BEA and Distributor agree as follows:

1.   DEFINITIONS.  For purposes of this Agreement, each capitalized term shall
have the respective meaning set forth in this Section 1 unless this Agreement
expressly provides otherwise.

     a.  "BEA AUTHORIZED DISTRIBUTOR" means an entity that is authorized in
         writing by BEA to distribute BEA Products.

     b.  "BEA PRODUCTS" means the BEA products identified in Exhibit A that
         Distributor is authorized to market and sell under this Agreement.

     c.  "BUNDLED PRODUCTS" means the combination of the BEA Products and
         Distributor Products that Distributor will market and sell as a single
         product offering.

     d.  "DOCUMENTATION" means user manuals, reference manuals and installation
         guides, or portions thereof, which BEA provides with the BEA Products
         either in hard copy or electronic copy, as updated by BEA from time to
         time.

     e.  "END USER" means an entity who is not an affiliate of Distributor's
         enterprise and acquires the BEA Products for Internal Use.  "End User"
         does not include an entity which resells, sells, licenses, rents,
         leases or otherwise distributes BEA Products to any other party in the
         regular course of business.

     f.  "EXPIRATION DATE" means the date identified as the expiration date in
         Exhibit A.

     g.  "INTERNAL USE" means use for purposes which do not directly produce
         revenue for the End User.  "Internal Use" does not include timesharing
         or any service bureau arrangement.

     h.  "MARKS" means BEA's trademarks, trade names, service marks, service
         names, logos, insignias and other designations.

     i.  "DISTRIBUTOR PRODUCTS" means Distributor's products and/or services
         identified in Exhibit B, with which the BEA Products will be bundled.

     j.  "TERRITORY" means the geographic region(s) set forth in Exhibit A.

2.   APPOINTMENT AND LICENSE GRANT

     a.   APPOINTMENT.  BEA appoints Distributor as a BEA Authorized
          Distributor.  This appointment is non-exclusive, with BEA reserving
          the right to appoint other Distributors without restriction as to
          number and location.  Subject to the terms and conditions of this
          Agreement, BEA grants Distributor a non-exclusive, nontransferable
          license to market, sell and distribute BEA Products in the Territory
          to End Users acquiring Bundled Products for Internal Use.
          Distributor agrees to offer


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                  2                 BEA CONFIDENTIAL

<PAGE>

         BEA Products for sale to End Users only as a part of a Bundled Product
         offering and not as a separate product offering.

     b.  DISTRIBUTOR BUSINESS PLAN.  Distributor represents and warrants that it
         has provided BEA a business plan relating to this Agreement which is
         attached hereto as Exhibit C and that the business plan is materially
         accurate.  Distributor agrees to provide business plan updates in
         accordance with the format, content and schedule reasonably requested
         by BEA.  Distributor acknowledges that BEA has materially relied upon
         Distributor's representations in the business plan in appointing
         Distributor as a BEA Authorized Distributor and that BEA may terminate
         the Agreement if Distributor makes an untrue statement or omits to
         state a material fact in the business plan or any business plan update.

3.   PRODUCTS AND PRICES

     a.  ELIGIBLE PRODUCTS.  Distributor may market the BEA Products specified
         in Exhibit A. BEA reserves the right at any time to make changes to any
         BEA Products, including without limitation, changes which are required
         (i) for security or (ii) to facilitate performance in accordance with
         specifications.

     b.  PRICING AND DISCOUNTS.  Distributor may acquire BEA Products under the
         Agreement at the prices listed in BEA's general price list, less the
         discount set forth in Exhibit A (or, as applicable, at the per unit
         price set forth in Exhibit A).  BEA reserves the right at any time to
         (i) add BEA Products to, or drop BEA Products from, the general price
         list and Exhibit A, (ii) increase or decrease prices on the general
         price list and/or (iii) to increase or decrease discounts or per unit
         prices.  Price changes become effective upon thirty (30) days' prior
         written notice to Distributor.  Orders requesting delivery after the
         effective date of a price increase will be charged at the increased
         price.  Distributor agrees to waive the notice requirement in the event
         BEA decreases prices or increases discounts.

     c.  TAXES.  Prices are exclusive of all applicable taxes. Distributor
         agrees to pay all taxes associated with Distributor's purchase,
         marketing, sublicensing and distribution of the BEA Products ordered
         under the Agreement, including but not limited to sales, use, excise,
         added value and similar taxes and all customs, duties or governmental
         impositions, but excluding taxes on BEA's net income.  Any tax or duty
         BEA may be required to collect or pay upon the sale or delivery of the
         BEA Products to Distributor will be paid by Distributor, and such sums
         shall be due and payable to BEA upon delivery to Distributor.  If
         Distributor claims a tax exemption, Distributor must provide BEA with
         valid tax exemption certificates.

     d.  PRODUCT UPGRADES.  Distributor may upgrade any BEA Products acquired by
         Distributor under this Agreement in accordance with BEA's general
         product upgrade policies.  This upgrade right will expire on the
         Expiration Date or on the date this Agreement is otherwise terminated
         as provided in Section 12.

     e.  VOLUME FORECAST.  Distributor agrees to use commercially reasonable
         efforts to achieve the total volume forecast set forth in Exhibit A
         during the term of the Agreement.  Distributor also agrees that BEA may
         review the actual dollar volumes achieved by Distributor on a quarterly
         basis and may terminate the Agreement, under Section 12(a), for failure
         to meet two successive quarterly volume forecasts.


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                3                   BEA CONFIDENTIAL

<PAGE>

     f.  PRICE PROTECTION.  In the event of a price decrease, all inventory
         acquired by Distributor from BEA within sixty (60) days before the
         price decrease and not yet sold or under a contract for sale will be
         granted price protection.  The difference between the price existing
         immediately prior to the decrease, less any prior credits, and the new
         price will be credited to Distributor's account. Price protection will
         not be granted in the case of a temporary price decrease or a special
         promotion.

4.   MARKETING, END USER SATISFACTION AND SUPPORT

     a.  USE OF AUTHORIZED DISTRIBUTOR TITLE.  Distributor may refer to itself,
         in connection with exercising its rights under this Agreement, as a
         "BEA Authorized Distributor," but solely in connection with marketing
         the Bundled Products and only during the term of the Agreement.

     b.  USE OF BEA MARKS.

           (i)  During the term of this Agreement, Distributor shall use, and is
                hereby granted a non-transferable, non-exclusive and restricted
                license (with no right to sublicense, except as expressly
                provided herein) to use, the Marks applicable to BEA Products
                acquired under this Agreement in connection with any
                advertising, packaging, marketing, technical or other materials
                related to Distributor's marketing and distribution of the
                Bundled Products.  Such use by Distributor shall be in
                accordance with BEA's then current trademark usage policies as
                provided, and updated from time to time, by BEA.  All such usage
                shall inure to BEA's benefit. Upon the Expiration Date or
                termination of the Agreement, Distributor agrees to cease all
                display, advertising and use of any and all Marks.

          (ii)  Distributor acknowledges BEA's ownership of and title to all
                rights in the Marks and the goodwill attaching to the Marks.
                Distributor agrees not to contest the Marks, or make application
                for registration of any Marks without BEA's express prior
                written consent.  Distributor agrees not to alter, remove or
                obscure any proprietary notice provided by BEA, and Distributor
                shall clearly indicate BEA's ownership of the Marks. Distributor
                agrees not to attach any additional Marks without the prior
                written consent of BEA or affix any Marks to any non-BEA
                product.  Distributor agrees not to use, employ or attempt to
                register any trademarks or trade names which are confusingly
                similar to Marks.

         (iii)  Upon BEA's request from time to time, Distributor agrees to
                provide BEA with copies of goods bearing the Marks so that BEA
                can verify that the quality of Distributor's use of such Marks
                is comparable to that of BEA's use thereof. Distributor shall
                suspend use of the Marks if such quality is reasonably deemed
                inferior by BEA until Distributor has taken such steps as BEA
                may reasonably require to solve the quality deficiencies.

     c.  END USER SATISFACTION.  The BEA Products marketed and distributed by
         Distributor under this Agreement are technically complex and require
         high-quality, individualized pre-sale and post-sale support.  This
         support is necessary to achieve and maintain high End User
         satisfaction.  Distributor agrees that high End User satisfaction is a
         condition of its continued authorization under this Agreement by


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                4                   BEA CONFIDENTIAL

<PAGE>

         BEA.  Although BEA has granted Distributor a license to market and sell
         BEA Products in the Territory under the terms of this Agreement,
         Distributor agrees that it will not market and sell BEA Products in
         areas where it does not have the ability to support adequately the BEA
         Products.  In addition, in order to help ensure high End User
         satisfaction, Distributor agrees to:

                    *    Report to BEA promptly and in writing all suspected
                         and actual problems with any BEA Product;

                    *    Maintain a shipment report identifying the End User,
                         the BEA Product sold, the date of sale, and each BEA
                         Product's serial number;

                    *    Retain all shipment reports for three (3) years after
                         the date of sale, and assist BEA, upon request, in
                         tracing a product to an End User, in order to
                         distribute critical product information, locate a BEA
                         Product for safety reasons, or discover unauthorized
                         marketing or infringing acts;

                    *    Conduct business in a manner which reflects favorably
                         at all times on the products, goodwill and reputation
                         of BEA;

                    *    Avoid deceptive, misleading or unethical practices
                         which are or might be detrimental to BEA or the BEA
                         Products;

                    *    Refrain from, making any false or misleading
                         representations with regard to BEA or the BEA Products;

                    *    Refrain from making any representations, warranties or
                         guarantees to customers with respect to the
                         specifications, features or capabilities of the BEA
                         Products that are inconsistent with the literature
                         distributed by BEA; and

                    *    Provide all original diskettes and manuals accompanying
                         each BEA Product to the End User.

     d.  COMPLIANCE BY END USERS.  Software acquired under this Agreement is
         made available to Distributor to market only under the provisions of
         this Agreement.  When marketing, Distributor agrees to exercise
         commercially reasonable efforts to ensure that each End User receiving
         the software through Distributor understands, and agrees to be bound
         by, the applicable BEA software license agreement ("Software License
         Agreement").  For purposes of the Agreement, "software" includes
         firmware and software stored in ROMs.  In addition, Distributor agrees
         to be bound by the applicable BEA Software License Agreement with
         respect to all software put to Internal Use by Distributor.

     e.  US AND FOREIGN DISTRIBUTION.

                    (i)  Certain BEA Products, or versions of BEA Products, are
                         restricted to US distribution.  Distributor will not
                         distribute such BEA Products or versions outside of the
                         United States.

                   (ii)  Distributor shall obtain a signed Software License
                         Agreement, as defined in Section 4(d), from End Users
                         outside the US.  Distributor shall either obtain the
                         form for such an agreement from BEA, or use a
                         Distributor form


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                5                   BEA CONFIDENTIAL

<PAGE>

                         agreement that provides at least as strong of
                         protection for BEA as the BEA form agreement.

          f.   CONFLICT OF INTEREST.  Distributor shall promote the products of
               other companies only if such promotion will not prejudice BEA's
               business interests or create a conflict of interest in handling
               BEA's confidential or proprietary information.  As part of
               Distributor's business plan of Exhibit C, Distributor shall
               provide BEA with a list of the companies and products that it
               currently represents and shall notify BEA in writing of any new
               companies and products at such time as Distributor begins to
               promote the companies and products.

          g.   TESTING AND CERTIFICATION.  To the extent required by BEA,
               Distributor agrees not to market Distributor Products with BEA
               Products, until the Distributor Products have been tested and
               approved by BEA.

          h.   INDEMNIFICATION.  Distributor agrees to indemnify, hold harmless
               and, at BEA's request, defend BEA and its suppliers from and
               against any and all claims, liabilities, losses, damages expenses
               and costs (including attorneys' fees and costs) arising out of,
               in connection with or relating to (except to the extent that BEA
               is responsible for a claim under Section 9(a) and 9(b) use or
               distribution of the BEA Products, Documentation, Distributor
               Products and/or Bundled Products.

          i.   MAINTENANCE AND SUPPORT.  Distributor is responsible for
               providing front-line support to End Users that acquire BEA
               Products through Distributor.  Distributor represents that it has
               trained staff to the level of providing BEA Product installation,
               and on-going "how to" support, and can diagnose problems to the
               BEA Product system level, i.e. to problems that require
               maintenance BEA reserves the right to require Distributor to seek
               additional training if, in BEA's opinion, Distributor's staff
               requires such training.  During the term of this Agreement and
               for so long as BEA shall continue to offer support to in other
               general Distributors of the BEA Products, Distributor may
               contract with BEA to have BEA provide back-end support to
               Distributor's staff, equivalent to the support provided by BEA to
               other similarly situated BEA Authorized Distributors.

5.   PLACING ORDERS & TERMS OF PAYMENT

     a.   CREDIT AND PAYMENT TERMS.

                    (i)  International Distributors must make all payments by an
                         irrevocable confirmed letter of credit.  BEA may extend
                         to Distributor a line of credit based upon
                         Distributor's financial information and evidence of
                         Distributor's financial security as reasonably required
                         by BEA.  BEA reserves the right to set the credit limit
                         at any level deemed prudent, and may increase or
                         decrease the line of credit at any time based upon
                         Distributor's payment history, credit limit, and/or
                         perceived risk. Distributor agrees to pay for BEA
                         Products it orders in accordance with the credit and
                         payment terms provided to Distributor, as they may
                         change from time to time, or any special terms and
                         conditions stated on any invoice.

                   (ii)  Distributor agrees to pay all invoices promptly within
                         thirty (30) days after receipt of BEA's invoice and to
                         maintain good financial standing with BEA.


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                6                   BEA CONFIDENTIAL

<PAGE>

                Invoices not paid when due will accrue interest on an
                annual/a monthly basis from the date due until paid in
                full at a rate of one percent (1%) per month on any
                outstanding balance or the maximum legal rate allowed
                by law, whichever is less.  All BEA Products ordered by
                Distributor in excess of the credit limit will be paid
                for in acceptable currency in advance of shipment, by a
                letter of credit drawn upon a bank acceptable to BEA, a
                bank cashier's check, or a bank wire transfer.

     b.   ACCEPTANCE OF ORDERS.  All orders will be subject to acceptance
          in writing by BEA at its principal place(s) of business and will not
          be binding until the earlier of acceptance or shipment. Orders
          requesting shipment more than ninety (90) days from the date of the
          order will not be subject to acceptance by BEA and will be null and
          void.  Should orders for BEA Products exceed BEA's available
          inventory, BEA may, unless Distributor has specifically indicated
          otherwise in its purchase order, accommodate Distributor's order by
          allocating available inventory and making shipments on a basis BEA
          deems equitable, without liability to BEA on account of the method of
          allocation chosen or its implementation.  Orders not filled or
          completely filled by BEA within ninety (90) days of the date of the
          orders will be deemed to have lapsed and will be removed from BEA's
          order entry system, to the extent not filled.

     c.   CANCELLATION OF ORDERS.  Orders accepted by BEA may be canceled
          without penalty by giving written notice of cancellation to BEA at
          least fifteen (15) days prior to the scheduled shipment date.  Orders
          canceled less than fifteen (15) days prior to the scheduled shipment
          date may be subject to a cancellation payment of fifteen percent (15%)
          of the invoice value of the canceled order.  In no event may
          Distributor cancel any order or any portion of an order after
          shipment.

     d.   PRODUCT AVAILABILITY AND SHIPPING DESIGNATIONS.  BEA will use
          commercially reasonable efforts to fill Distributor's orders for BEA
          Products and meet Distributor's request for shipment dates subject to
          product availability and consistent with BEA production and supply
          schedules, but BEA will not be liable for any damages to Distributor
          or to any third party for BEA's failure to fill any orders for any
          delay in delivery or error in filling any orders for any reason
          whatsoever.  Distributor may designate up to three (3) "bill to"
          addresses and up to five (5) "ship to" addresses for shipments under
          the Agreement.  BEA will ship BEA Products and bill Distributor to
          Distributor's designated "ship to" and "bill to" locations.
          Distributor may change the "ship to" location at any time prior to
          the estimated shipment date; however, BEA may not be able to honor a
          notice, unless it is in writing and received at least fifteen (15)
          days prior to the estimated shipment date.  The right to change "ship
          to" locations does not include any right to drop ship to customer
          sites.

     e.   NO OBLIGATION TO SHIP IN EVENT OF BREACH.  Even in cases where
          BEA accepts a purchase order, BEA will not be obligated to ship BEA
          Products if Distributor is in arrears on payments owing to BEA
          Products or if Distributor is otherwise in material breach of this
          Agreement at the time of the scheduled shipment.

     f.   DELIVERY.  Delivery in the United States and Canada will be made
          C.F., Distributor's facility, BEA's carrier, ground only.  All other
          freight arrangements will be prepaid


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                  7                 BEA CONFIDENTIAL

<PAGE>

          and billed to Distributor.  For delivery outside the United States and
          Canada, BEA will select a carrier to transport BEA Products to the
          "ship to" point(s) designated by Distributor pursuant to Section 4(a),
          will prepay insurance and freight, and will add the cost of insurance
          and freight to Distributor's invoice.

     g.   TITLE & RISK OF LOSS  Title to the tangible media of the BEA
          Products (exclusive of the rights retained by BEA in any Marks,
          patents, copyrights, trade secrets and any other intellectual
          property) and all risk of loss will pass to Distributor upon delivery
          at BEA's designated shipping facility to Distributor or the common
          carrier selected by BEA.

     h.   SECURITY INTEREST.  Distributor grants BEA, as security for its
          obligations under the Agreement, a purchase money security interest
          in (i) the BEA Products to be acquired from BEA under this Agreement
          or any extension of this Agreement, and (ii) the proceeds of the BEA
          Products.  Upon BEA's request, Distributor agrees to execute and
          cause to be filed all instruments or documents (including, without
          limitation, financing statements) necessary to perfect any security
          interest, and further agrees that, in any event, BEA may file a copy
          of this Agreement as a financing statement for this purpose.

     i.   POINT OF SALE REPORTS.  Distributor agrees to provide BEA, by no
          later than the tenth (10th) day of each calendar month, a Point of
          Sale report for the previous calendar month.  "Point of Sale (POS)
          Report" means, for purposes of the Agreement, a report provided by
          Distributor to BEA which is in a BEA-specified format and which
          includes, among other things, (i) a list of BEA Products sold, (ii)
          the regional designation required by BEA, (iii) the part numbers of
          the BEA Products sold, and (iv) the amount of on-hand inventory of
          all BEA Products by product number (including products listed in the
          POS Report and any other BEA Products in inventory not otherwise
          included in the POS Report).  The POS Report may only be used by BEA
          to provide compensation to BEA's sales force and to concentrate
          marketing activities to promote greater sales.

6.   PROPRIETARY RIGHTS

     a.   PROPRIETARY RIGHTS.  Notwithstanding any provision of this
          Agreement to the contrary, BEA (or the licensor through which BEA
          obtained the rights to distribute the BEA Products) exclusively owns
          and retains all right, title, interest in and to, and ownership of,
          all intellectual property rights in the BEA Products (and any copies
          and portions thereof), whether in machine readable or printed form,
          including, without limitation, (i) all software, firmware,
          documentation and related materials which are acquired from, produced
          by or shipped by BEA under this Agreement, (ii) all modifications
          to, and derivative works, compilations or collective works of, the
          BEA Products made by Distributor, BEA or any third party, and (iii)
          all related technical know-how and all rights therein (including,
          without limitation, rights in patents, copyrights, and trade secrets
          applicable thereto).  BEA does not transfer any portion of such title
          and ownership, or any of the associated goodwill, to Distributor, and
          this Agreement should not be construed to grant Distributor any right
          or license, whether by implication, estoppel or otherwise, except as
          expressly provided herein.  Distributor agrees to be bound by and
          observe the proprietary nature of the BEA Products acquired under
          this Agreement.  Distributor agrees to take appropriate


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                 8                  BEA CONFIDENTIAL

<PAGE>

          action by instruction or agreement with its employees, agents and
          contractors who are permitted access to the BEA Products to fulfill
          Distributor's obligations under this Agreement; and Distributor shall
          not take any action to jeopardize, limit or interfere in any manner
          with BEA's (or its licensors') ownership of and rights with respect to
          the BEA Products and Documentation. Except as set forth in this
          Agreement, or as may be permitted in writing by BEA, Distributor
          agrees not to provide BEA Products or any part or copies thereof to
          any third party without the prior written consent of BEA.

     b.   PROPRIETARY NOTICES.  Neither Distributor nor any of its employees or
          agents shall remove or alter any trademark, trade name, copyright, or
          other proprietary notices, legends, symbols, or labels appearing on or
          in copies of the BEA Products and Documentation delivered to
          Distributor by BEA.

     c.   PRODUCT RESTRICTION TAMPERING.  Except to the extent permitted
          by applicable law despite this restriction, Distributor agrees not to
          copy, modify, translate, decompile, disassemble, or otherwise reverse
          engineer, or otherwise determine or attempt to determine source code
          or protocols from, the executable code of the BEA Products or to
          create any Derivative Works based upon the BEA Products or
          Documentation, and agrees not to permit or authorize anyone else to
          do so.  Distributor also agrees that any such works are derivative
          works and as such are the sole and exclusive property of BEA or its
          licensor.

7.   CONFIDENTIAL INFORMATION

     a.   CONFIDENTIAL INFORMATION.  For purposes of this Agreement
          "Confidential Information" shall mean information including, without
          limitation, computer programs, code, algorithms, names and expertise
          of employees and consultants, know-how, formulas, processes, ideas,
          inventions (whether patentable or not), schematics and other
          technical, business, financial and product development plans,
          customer lists, information regarding distribution channels,
          forecasts, and strategies, whether or not such items are marked
          "Confidential", but if disclosed orally, identified as confidential
          and reduced to writing within thirty (30) days after such oral
          disclosure.

     b.   RESTRICTIONS ON DISCLOSURE AND USE.  Each party agrees to
          maintain all Confidential Information in confidence to the same
          extent that it protects its own similar Confidential Information and
          to use such Confidential Information only as permitted under this
          Agreement.  Each party agrees to take all reasonable precautions to
          prevent any unauthorized disclosure or use of Confidential
          Information including, without limitation, disclosing Confidential
          Information only to its employees, independent contractors,
          consultants, and legal and financial advisors (i) with a need to know
          to further permitted uses of such information, (ii) who are parties
          to appropriate agreements sufficient to comply with this Section 7,
          and (iii) who are informed of the nondisclosure/ non-use obligations
          imposed by this Section 7 and both parties shall take appropriate
          steps to implement and enforce such nondisclosure/non-use
          obligations.

     c.   EXCLUSIONS.  The foregoing restrictions on disclosure and use
          shall survive for five (5) years following termination of this
          Agreement but shall not apply with respect to


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                9                   BEA CONFIDENTIAL

<PAGE>

          any Confidential Information which: (i) was or becomes publicly
          known through no fault of the receiving party; (ii) was rightfully
          known or becomes rightfully known to the receiving party without
          confidential or proprietary restriction from a source other than the
          disclosing party; (iii) is independently developed by the receiving
          party without the participation of individuals who have had access to
          the Confidential Information; (iv) is approved by the disclosing
          party for disclosure without restriction in a written document which
          is signed by a duly authorized officer of such disclosing party; or
          (v) the receiving party is legally compelled to disclose; provided,
          however, that prior to any such compelled disclosure, the receiving
          party will (A) assert the privileged and confidential nature of the
          Confidential Information against the third party seeking disclosure
          and (B) cooperate fully with the disclosing party in protecting
          against any such disclosure and/or obtaining a protective order
          narrowing the scope of such disclosure and/or use of the Confidential
          Information.  In the event that such protection against disclosure is
          not obtained, the receiving party will be entitled to disclose the
          Confidential Information, but only as and to the extent necessary to
          legally comply with such compelled disclosure.

8.   WARRANTIES

     a.   LIMITED WARRANTY.  Subject to the limitations set forth in this
          Agreement, BEA warrants only to Distributor that the BEA Products
          when properly adapted, installed, and used will substantially conform
          to the functional specifications set forth in the Documentation in
          effect when the BEA Products are shipped by BEA to Distributor.
          BEA's warranty and obligation shall extend for a period of ninety
          (90) days ("Warranty Period") from the date BEA ships the BEA
          Products to Distributor.  All warranty claims not made in writing or
          not received by BEA within the time period specified above shall be
          deemed waived.  BEA's warranty and obligation is solely for the
          benefit of Distributor, who has no authority to extend this warranty
          to any other person or entity.  BEA MAKES NO WARRANTY THAT ALL ERRORS
          OR FAILURES WILL BE CORRECTED.

     b.   EXCLUSIVE WARRANTY.  THE EXPRESS WARRANTY SET FORTH IN 8.a
          CONSTITUTES THE ONLY WARRANTY WITH RESPECT TO THE BEA PRODUCTS AND
          DOCUMENTATION.  BEA MAKES NO OTHER REPRESENTATION OR WARRANTY OR
          CONDITION OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER IN FACT OR
          BY OPERATION OF LAW) WITH RESPECT TO THE BEA PRODUCTS OR
          DOCUMENTATION.  BEA EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS
          OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.  BEA DOES NOT
          WARRANT THAT THE BEA PRODUCTS OR DOCUMENTATION ARE ERROR-FREE OR THAT
          OPERATION OF THE BEA PRODUCTS WILL BE SECURE OR UNINTERRUPTED AND
          HEREBY DISCLAIMS ANY AND ALL LIABILITY ON ACCOUNT THEREOF.  THERE IS
          ALSO NO IMPLIED WARRANTY OF NON-INFRINGEMENT; THE SOLE REMEDY FOR
          INFRINGEMENT IS PROVIDED IN SECTION 9. This subsection shall be
          enforceable to the extent allowed by applicable law.

     c.   EXCLUSIONS FROM WARRANTIES.  BEA does not warrant BEA products
          which are not manufactured by BEA.  Such products are provided by BEA
          on an "AS IS" basis.


- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)                10                  BEA CONFIDENTIAL



<PAGE>

               Any warranty service for such non-BEA products will be provided
          by the manufacturer of such non-BEA products in accordance with the
          applicable manufacturer's warranty.  In addition, BEA shall have no
          obligations under the warranty provisions set forth in Section 8(a)
          if any nonconformance is caused by: (a) the incorporation, attachment
          or other engagement of any attachment, feature, program, or device,
          other than by BEA, to the BEA Products, or any part thereof; or (b)
          accident; transportation; neglect or misuse; alteration,
          modification, or enhancement of the BEA Products other than by BEA;
          failure to provide a suitable installation environment; use of
          supplies or materials not meeting specifications; use of the BEA
          Products for other than the specific purpose for which the BEA
          Products are designed; use of the BEA Products on any systems other
          than the specified hardware platform for such BEA Products;
          Distributor's use of defective media (other than defective media
          provided by BEA to Distributor) or Distributor's failure to
          incorporate any update previously released by BEA which corrects such
          nonconformance.

     d.   EXCLUSIVE REMEDY.  In the event that Distributor finds what it
          believes to be errors in or a failure of the BEA Products that
          prevents the BEA Products from substantially conforming to the
          functional specifications set forth in the Documentation in effect
          when the BEA Products are shipped by BEA to Distributor, and provides
          BEA with a written report thereof during the Warranty Period, BEA
          will use reasonable efforts to correct promptly, at no charge to
          Distributor, any such errors or failures.  This is Distributor's sole
          and exclusive remedy, and BEA's sole obligation, for any express or
          implied warranties hereunder.

     e.   WARRANTY OF AUTHORITY.  Each party hereby warrants that it has
          the authority to enter into and be bound by the terms of this
          Agreement.

9.   INDEMNIFICATION

     a.   INDEMNIFICATION.  BEA shall defend any action, claim or demand
          brought against Distributor to the extent it is based on a claim that
          distribution by Distributor of the BEA Products furnished hereunder
          within the scope of a license granted hereunder directly infringes
          any valid United States patent as of the Effective Date, United
          States copyright, United States trademark, or trade secret in the
          United States (collectively, "Claims").  BEA will pay resulting
          costs, damages and legal fees finally awarded against Distributor in
          such action which are attributable to such Claims provided that
          Distributor (a) promptly (within twenty (20) days) notifies BEA in
          writing of any such Claim and BEA has sole control of the defense and
          all related settlement negotiations, and (b) reasonably cooperates
          with BEA in defending or settling such claim.

     b.   ACTUAL OR POTENTIAL PRODUCT INFRINGEMENT.  Should the BEA
          Products (or the operation of the BEA Products) become, or in BEA's
          opinion be likely to become, the subject of infringement of any
          patent, copyright, trademark, trade secret or any other third-party
          right, Distributor agrees to permit BEA, at its option and expense,
          either to procure for Distributor the right to continue using the BEA
          Products, to replace or modify them so that they become non-
          infringing, or to grant Distributor credit for the BEA Products as
          depreciated on a straight-line method, using a useful life of five
          (5) years, and accept their return.


_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 11                BEA CONFIDENTIAL



<PAGE>


     c.   DISCLAIMER.  THIS SECTION 9 STATES THE ENTIRE LIABILITY OF BEA,
          AND TOGETHER WITH DISTRIBUTOR'S TERMINATION RIGHTS ARISING UNDER THIS
          AGREEMENT, THE EXCLUSIVE REMEDY OF DISTRIBUTOR WITH RESPECT TO
          INFRINGEMENT OF PATENTS, COPYRIGHTS TRADEMARKS OR ANY OTHER
          INTELLECTUAL PROPERTY RIGHTS, WHETHER UNDER THEORY OF WARRANTY,
          INDEMNITY OR OTHERWISE.

10.  LIMITATION OF LIABILITY

     a.   NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT
          (UNLESS OTHERWISE REQUIRED BY APPLICABLE LAW), BEA WILL NOT BE LIABLE
          TO DISTRIBUTOR FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR
          CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS) SUSTAINED OR INCURRED
          IN CONNECTION WITH THIS AGREEMENT AND THE BEA PRODUCTS THAT ARE
          SUBJECT TO THIS AGREEMENT REGARDLESS OF THE FORM OF ACTION OR LEGAL
          OR EQUITABLE THEORY AND WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE.

     b.   NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED
          REMEDY OR INVALIDITY OF THIS SECTION 10, THE TOTAL LIABILITY OF BEA
          OR ITS SUPPLIERS, REGARDLESS OF THE FORM OF ACTION, SHALL NOT EXCEED
          THE GREATER OF (1) $100,000 OR (2) THE PRICE, LESS ANY APPLICABLE
          DISCOUNT, OF THE BEA PRODUCT THAT CAUSED THE DAMAGES OR GAVE RISE TO
          THE CAUSE OF ACTION.  THIS LIMITATION SHALL NOT APPLY TO BEA'S
          LIABILITY UNDER SECTION 9.

11.  TERM

     The term of this Agreement, unless terminated earlier as provided in the
     Agreement, will commence on the Effective Date and will automatically
     expire on the Expiration Date.  The acceptance of any purchase order by
     BEA after the Expiration Date will be construed as extending this
     Agreement on a month-to-month basis, with the month-to-month Agreement
     subject to termination at any time by either party upon thirty (30) days'
     prior written notice.  Nothing contained in this Agreement should be
     interpreted as requiring either BEA or Distributor to renew or extend this
     Agreement.

12.  TERMINATION

     a.   TERMINATION FOR CAUSE.  Either party may terminate this
          Agreement for the breach by the other party of a material term of
          this Agreement, provided that the nonbreaching party will first give
          the other party written notice of the breach and a reasonable period
          of at least thirty (30) days in which to cure the alleged breach.  If
          a cure is not achieved during the cure period, then the non-breaching
          party may terminate this Agreement upon written notice.
          Notwithstanding the foregoing, BEA shall have the right to terminate
          this Agreement immediately if Distributor materially breaches
          Sections 2(a), 4(b), 6(c) or 7.


_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 12                BEA CONFIDENTIAL


<PAGE>


     b.   TERMINATION BY BEA.  BEA may terminate this Agreement if
          Distributor fails to meet its payment obligations under this
          Agreement and this failure continues for ten (10) days following
          receipt of written notice from BEA.

     c.   BANKRUPTCY.  Either party may terminate this Agreement upon
          written notice to the other party if the other party (i) is not
          paying its debts as such debts generally become due, (ii) becomes
          insolvent, (iii) files or has filed against it a petition (or other
          document), under any Bankruptcy Law or similar law, which is
          unresolved within sixty (60) days of the filing of such petition (or
          document), (iv) proposes any dissolution, liquidation, composition,
          financial reorganization or recapitalization with creditors, (v)
          makes a general assignment or trust mortgage for the benefit of
          creditors, or (vi) if a receiver, trustee, custodian or similar agent
          is appointed or takes possession of any of its property or business.

     d.   TERMINATION FOR CONVENIENCE.  Either party may terminate this
          Agreement solely for convenience upon ninety (90) days' prior written
          notice.

     e.   EFFECT ON RIGHTS.

          (i)  Termination of this Agreement by either party shall
               not act as a waiver of any breach of this Agreement and shall
               not act as a release of either party from any liability for
               breach of such party's obligations under this Agreement.

          (ii) Except as specified in Section 12(f)(ii), upon
               termination or expiration of this Agreement, all licenses for
               BEA Products and Documentation granted under this Agreement
               shall terminate.

         (iii) Except where otherwise specified, the rights and
               remedies granted to a party under this Agreement are cumulative
               and in addition to, and not in lieu of, any other rights or
               remedies which the party may possess at law or in equity,
               including without limitation rights or remedies under applicable
               patent, copyright, trade secrets, or proprietary rights laws,
               rules or regulations.

     f.   EFFECT OF TERMINATION.

         (i)   Within thirty (30) calendar days after termination of this
               Agreement, Distributor shall either deliver to BEA or destroy
               all copies of the BEA Products and Documentation (except as
               provided in Section 12(f)(ii)) and any other materials provided
               by BEA to Distributor hereunder in its possession or under its
               control, and shall furnish to BEA an affidavit signed by an
               officer of Distributor certifying that, to the best of its
               knowledge, such delivery or destruction has been fully effected.
          
         (ii)  Notwithstanding Section 12(f)(i) and provided that this
               Agreement is not terminated by BEA pursuant to Section 12(a),
               12(b) or 12(c) and that Distributor fulfills its obligations
               specified in this Agreement with respect to such items,
               Distributor may continue to use and retain a limited number of
               copies of the BEA Products and Documentation to the extent, but
               only to the extent, necessary to support BEA Products rightfully
               distributed to End Users by Distributor prior to termination of
               this Agreement.
          
         (iii) Upon termination of this Agreement by BEA under Section
               12(a), 12(b) or 12(c), the due dates of all outstanding invoices
               to Distributor for BEA

_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 13                BEA CONFIDENTIAL


<PAGE>


               Products will automatically be accelerated so that they become
               due and payable on the effective date of termination, even if
               longer terms had been provided previously. All orders or portions
               of orders remaining unshipped as of the effective date of such
               termination will automatically be canceled.

     g.   CONTINUING OBLIGATIONS.

         (i)   PAYMENT OF ACCRUED FEES.  Within thirty (30) calendar
               days of termination of this Agreement, Distributor shall pay to
               BEA all sums then due and owing.  Any other such sums shall
               subsequently be promptly paid as they become due and owing.

         (ii)  CONTINUANCE OF SUBLICENSES.  Notwithstanding the
               termination of this Agreement, all End User sublicenses which
               have been properly granted by Distributor and Distributors
               pursuant to this Agreement prior to its termination shall
               survive.  Distributor shall cooperate with BEA to allow BEA to
               take over all Distributor accounts that may wish to continue to
               obtain BEA Products.

         (iii) OTHER CONTINUING OBLIGATIONS.  The respective
               rights and obligations of BEA and Distributor under the
               provisions of Sections 4(b)(ii), 4(d), 4(f), 5(a)(ii), 5(h), 6,
               7, 8(b), 8(c), 8(d), 9, 10, 12(e), 12(f), 12(g) and 13 shall
               survive any termination of this Agreement.

13.  GENERAL PROVISIONS

     a.   FORCE MAJEURE.  If either party is prevented from performing any
          portion of the Agreement (except the payment of money) by causes
          beyond its control, including, without limitation, labor disputes,
          civil commotion, war, governmental regulations or controls, casualty,
          inability to obtain materials or services or acts of God, such
          defaulting party will be excused from performance for the period of
          the delay and for a reasonable time thereafter.

     b.   GOVERNING LAW.  This Agreement is entered into in the State of
          California, U.S.A., and this Agreement shall be governed by and
          construed in accordance with the laws of the State of California,
          U.S.A., without reference to its conflicts of law provisions.  Any
          dispute regarding this Agreement shall be subject to the exclusive
          jurisdiction of the California state courts in and for Santa Clara
          County, California (or, if there is exclusive federal jurisdiction,
          the United States District Court for the Northern District of
          California), and the parties agree to submit to the personal and
          exclusive jurisdiction and venue of these courts.  This Agreement
          will not be governed by the United Nations Convention of Contracts
          for the International Sale of Goods, the application of which is
          hereby expressly excluded.

     c.   WAIVER AND AMENDMENT.  The waiver by either party of a breach of
          or a default under any provision of this Agreement, shall not be
          construed as a waiver of any subsequent breach of the same or any
          other provision of the Agreement, nor shall any delay or omission on
          the part of either party to exercise or avail itself of any right or
          remedy that it has or may have hereunder operate as a waiver of any
          right or remedy.  No amendment or modification of any provision of
          this Agreement shall be


_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 14                BEA CONFIDENTIAL


<PAGE>


          effective unless in writing and signed by a duly authorized
          signatory of BEA and Distributor.

     d.   ASSIGNMENT.  BEA may assign its rights and obligations under
          this Agreement.  The Agreement is not assignable by Distributor nor
          are the obligations imposed on Distributor delegable, in whole or in
          part, without BEA's prior written consent.  Notwithstanding, BEA will
          not unreasonably withhold consent to an assignment of the Agreement
          or any part of the Agreement to a parent, subsidiary or affiliate.
          Any attempt to assign sublicense (except as expressly permitted
          herein) or transfer any of the rights, duties or obligations under
          this Agreement in derogation hereof without BEA's written consent
          will be null and void.

     e.   ATTORNEYS' FEES.  Each party agrees to pay the other's
          reasonable attorneys' fees and costs of litigation if the original
          party, for any cause whatsoever, brings suit against the other party
          and the other party is finally adjudicated not to have liability.

     f.   NOTICE.  Unless otherwise agreed to by the parties, all notices
          required under this Agreement will be deemed effective when received
          and made in writing by either (i) registered mail or certified mail,
          return receipt requested, (ii) overnight mail or express courier, in
          each case addressed and sent to the address indicated on the Cover
          Sheet and to the attention of the party executing the Agreement or
          that person's successor, or (iii) by telephone facsimile transfer
          appropriately directed to the attention of the party executing the
          Agreement or that person's successor.

     g.   SEVERABILITY.  If the application of any provision or provisions
          of this Agreement to any particular facts of circumstances shall be
          held to be invalid or unenforceable by any court of competent
          jurisdiction, then (a) the validity and enforceability of such
          provision or provisions as applied to any other particular facts or
          circumstances and the validity of other provisions of this Agreement
          shall not in any way be affected or impaired thereby and (b) such
          provision or provisions shall be reformed without further action by
          the parties hereto to and only to the extent necessary to make such
          provision or provisions valid and enforceable when applied to such
          particular facts and circumstances.

     h.   RELATIONSHIP OF THE PARTIES.  No agency, partnership, joint
          venture, or employment is created as a result of this Agreement, and
          neither Distributor nor its agents have any authority of any kind to
          bind BEA in any respect whatsoever.  Each party acknowledges that the
          parties to this Agreement are independent contractors and that it
          will not, except in accordance with the Agreement, represent itself
          as an agent or legal representative of the other.

     i.   COMPLIANCE WITH LAWS.  Distributor represents and warrants that
          all consents of governmental officials necessary for this Agreement
          to become effective have been obtained, or will be obtained, before
          Distributor places any orders under this Agreement.  Distributor will
          comply, at its own expense, with all statutes, regulations, rules,
          ordinances, and orders of any governmental body, department or agency
          which apply to or result from Distributor's obligations under this
          Agreement.  Distributor agrees to not export BEA Products, directly
          or indirectly, separately or as part of a system, without first
          obtaining proper authority to do so from the appropriate governmental
          agencies or entities, as may be required by law.  In particular,
          Distributor assures BEA that, absent any required prior authorization

_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 15                BEA CONFIDENTIAL


<PAGE>


          from the Office of Export Licensing, U.S. Department of
          Commerce, Distributor will not export or reexport (as defined in
          Section 779 of the Export Administration Regulations, as amended
          ("Regulations")) the BEA Products, any technical data or other
          confidential information, or direct product of any of the foregoing,
          to any Group Q, S, W, Y, or Z country specified in Supplement No. 1
          to Section 770 of the Regulations or such other countries as come
          under restriction by action of the United States Government, or to
          nationals from or residing in the foregoing countries, without first
          obtaining permission from the appropriate United States Government
          authorities.  The countries subject to restriction by action of the
          United States government are subject to change, and it is
          Distributor's responsibility to comply with the United States
          Government requirements as they may be amended from time to time.

     j.   GOVERNMENT RIGHTS.  Distributor agrees to (i) identify the BEA
          Products in all proposals and agreements with the United States
          Government or any contractor for the United States Government; and
          (ii) identify or mark the software products provided pursuant to any
          agreement with the United States Government or any contractor for the
          United States Government as necessary to obtain protection
          substantially equivalent to that afforded commercial computer
          software and related documentation developed at private expense and
          provided with Restricted Rights as defined in DOD FAR Supplement
          48 C.F.R. 252.227-7013(c)(1)(ii) in effect as of May 18, 1987 or any
          successor regulation.

     k.   RECORDS EXAMINATIONS.  Distributor agrees to allow BEA to
          examine its records to determine compliance or noncompliance with the
          Agreement.  Any examination will be at the expense of BEA and will be
          solely for the purpose of ensuring compliance with the Agreement.
          Any examination will be conducted only by an authorized
          representative of BEA, and will occur during regular business hours
          at Distributor's offices and will not interfere unreasonably with
          Distributor's business activities.  Examinations will be made no more
          frequently than quarterly, and BEA will give Distributor ten (10)
          days or more prior written notice of the date of the examination of
          the name of the BEA authorized representative who will be conducting
          the examination.  All information obtained by the BEA authorized
          representative conducting the audit will be maintained confidential
          by the representative.  The examiner will give Distributor and BEA an
          examination report containing only the information necessary to
          indicate compliance or non-compliance with the Agreement.  If the
          examiner determines that Distributor is not in material compliance
          with this Agreement, Distributor shall promptly remedy any such non
          compliance and will bear the expenses of the audit.

     l.   EXHIBITS.  The Exhibits to this Agreement are incorporated
          herein by this reference.

     m.   ENGLISH.  This Agreement is in the English language only, which
          language shall be controlling in all respects, and all versions
          hereof in any other language shall not be binding on the parties
          hereto.  All communications and notices to be made or given pursuant
          to this Agreement shall be in the English language.

     n.   ENTIRE AGREEMENT.  This Agreement, including the Exhibits
          attached hereto, constitutes the entire agreement between the parties
          concerning the subject matter hereof and supersedes all prior or
          contemporaneous proposals or agreements whether

_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 16                BEA CONFIDENTIAL


<PAGE>


          oral or written, and all communications between the parties
          relating to the subject matter of this Agreement and all past courses
          of dealing or industry custom.  Unless otherwise expressly agreed in
          writing by the parties, the terms and conditions of this Agreement
          shall prevail, notwithstanding any variance with any purchase order
          or other written instrument submitted by Distributor, whether or not
          formally rejected by BEA.  This Agreement will not be supplemented or
          modified by any course of dealing in usage of trade.






_______________________________________________________________________________
Distribution Agmt. (4/16/96)                 17                BEA CONFIDENTIAL


<PAGE>

                                   EXHIBIT A

                             INVENTORY MANAGEMENT

                          BEA PRODUCTS AND DISCOUNTS




EXPIRATION DATE:____________________________________________

TERRITORY:__________________________________________________

ELIGIBLE BEA PRODUCTS:

      Tuxedo Only

DISCOUNT:



VOLUME/SALES FORECAST (in $US):

For the period of_________  1996 -_________,  1996  $______________
For the period of_________  1996 -_________,  1996  $______________
For the period of_________  1996 -_________,  1997  $______________
For the period of_________  1997 -_________,  1997  $______________







- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)           18                       BEA CONFIDENTIAL
<PAGE>

                                   EXHIBIT B

                             DISTRIBUTOR PRODUCTS

                           [Distributor to provide]














- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)           19                       BEA CONFIDENTIAL
<PAGE>

                                   EXHIBIT C

                           DISTRIBUTOR BUSINESS PLAN

                           [Distributor to provide]












- --------------------------------------------------------------------------------
Distribution Agmt. (4/16/96)           20                       BEA CONFIDENTIAL
<PAGE>

                                   EXHIBIT B
                           JAPANESE TUXEDO AGREEMENT










Second Amendment                       7
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

                           Japanese TUXEDO Agreement

     This Japanese TUXEDO Agreement ("Agreement") is entered into as of August
1, 1996 ("Effective Date") among Novell, Inc. ("Novell"), Novell Japan Ltd., a
Japanese corporation ("Novell Japan"), BEA Systems Japan, Ltd., a Japanese
corporation ("BEA Japan"), and BEA Systems, Inc., a Delaware corporation
("BEA").

     WHEREAS, Novell Japan's parent company, Novell, entered into a TUXEDO
License and Distribution Agreement with BEA, effective January 24,1996 (the
"Novell Agreement"), with the closing on February 23, 1996, under which, among
other terms, Novell granted to BEA the exclusive right to distribute TUXEDO
software throughout the world; and,

     WHEREAS, the Novell Agreement contemplated that BEA would pursue this
agreement with Novell Japan regarding its TUXEDO Software related assets and the
Japanese localizations and translations thereof; and,

     WHEREAS, the parties desire to effect the assignment to BEA Japan of the
TUXEDO Software agreements between Novell Japan and its TUXEDO Software
licensees; and,

     WHEREAS, consistent with BEA's rights under the Novell Agreement, BEA and
BEA Japan wish to obtain exclusive rights to distribute TUXEDO Software in
Japan, and Novell and Novell Japan are willing to accept BEA's
desires under the terms and conditions set forth herein.

NOW THEREFORE, for mutual consideration that the parties acknowledge is
adequate and sufficient, it is agreed as follows:

1.   DEFINITIONS.  The following terms shall have the following definitions:

     a.   "Add-ons" shall mean any new feature enhancements or additions not
          already present in the Core Code which exist external to the Core
          Code, do not consist of Core Code and are not required for full
          functionality of the Core Code.
     
     b.   "Assumed Contracts" means all existing licenses, service contracts
          (including documentation), independent contractor agreements, and
          other agreements between Novell Japan and another party relating the
          TUXEDO Software, other than the TSDA.
     
     c.   "Core Code" shall mean the workstation (\WS) and server (\T) TUXEDO
          Software Code as delivered by Novell to BEA pursuant to Section 15 of
          the Novell Agreement.
     
     d.   "Derivative Work" shall mean a work which is based upon or
          incorporates one or more preexisting works, such as a revision,
          modification, translation, abridgement, condensation, expansion,
          collection, compilation or any other form in which such preexisting
          works may be recast, transformed or adapted, and which, if prepared
          without the authorization of the owner of the preexisting works,
          would constitute copyright infringement under U.S. copyright laws.

- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
SoftSolutions Document 4803          PAGE 1                     October 25, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

     e.   "Transferred Assets" means certain items of equipment, furnishings and
          other personal property previously used by Novell Japan in its TUXEDO
          department, as listed in Exhibit A.
     
     f.   "TSDA" means the Territorial Software Distribution Agreement dated
          February 21, 1986 and any related supplements of modifications
          executed between Novell (successor in interest to USL) and Novell
          Japan (successor in interest to USL Pacific).
     
     g.   "TUXEDO Software" means the TUXEDO Software as set forth in the 
          Section 2.26 of the Novell Agreement, including TUXEDO Software J, as
          listed in Exhibit B.
     
     h.   "TUXEDO Software J" means the Japanese translations and localizations
          of the TUXEDO Software.

2.   EXCLUSIVE SUBLICENSE OF NOVELL JAPAN RIGHTS.  Effective August 1, 1996, 
     Novell Japan exclusively sublicenses to BEA Japan all of Novell Japan's 
     rights relating to distribution and support of the TUXEDO Software that 
     arise out of the TSDA or out of Novell Japan's ownership of the TUXEDO 
     Software J, except for the right to distribute the NetWare version of 
     the TUXEDO Software in Japan.  This license shall be exclusive only 
     during those periods in which BEA's license under the Novell Agreement 
     is exclusive.  Novell Japan shall retain all right, title and interest 
     in and to the TUXEDO Software J, including all intellectual property rights
     thereto, subject to the rights and licenses granted to BEA Japan 
     hereunder.  Novell Japan shall also hold, retain or be granted title to 
     all Derivative Works of TUXEDO Software J created by either BEA Japan 
     or Novell Japan prior to BEA converting to a perpetual license under 
     the Novell Agreement, other than Derivative Works created by BEA Japan 
     that are Add-ons.  Derivative Works of the TUXEDO Software other than 
     TUXEDO Software J shall be governed by the Novell Agreement.

3.   TUXEDO SOFTWARE DISTRIBUTION AND SUPPORT IN JAPAN. Effective nunc pro 
     tunc February 23, 1996, BEA consents to Novell Japan continuing to 
     carry out its normal business activities relating to the distribution 
     and support of the TUXEDO Software in Japan under the TSDA during the 
     period from February 23, 1996 through July 31, 1996.  After August 1, 
     1996, Novell Japan will cease all such activities, and will not 
     distribute or support the TUXEDO Software in Japan, except to the 
     extent that Novell Japan is licensed by Novell to do so with respect to 
     the NetWare version of the TUXEDO Software, or to the extent necessary 
     for Novell Japan to major the TUXEDO business in implementing the 
     transfer of the business to BEA Japan.

4.   PAYMENTS TO BEA.  Pursuant to the terms and conditions of the Second 
     Amendment to the TUXEDO License and Distribution Agreement, Novell shall 
     compensate BEA for Novell's and Novell Japan's retention of the amounts 
     relating to the distribution or support of the TUXEDO Software under 
     the TSDA from February 23, 1996 through July, 31, 1996 ("Interim 
     Revenue").  The Interim Revenue shall not extend to: (a) any amounts 
     actually paid by Novell Japan to Novell prior to February 23, 1996, or 
     (b) any amounts that Novell can show were properly recognized as 
     revenue by Novell prior to February 23, 1996; and, (c) any amounts 
     properly recognized as revenue by Novell Japan prior to February 23, 
     1996.  Novell Japan has paid Novell thirty-five percent (35%) of the 
     net revenue of the Interim Revenue to Novell, and has no further 
     obligation with respect to the Interim Revenue to Novell, BEA, or BEA 
     Japan.

5.   ASSIGNMENT OF THE ASSUMED CONTRACTS.

     a.   Effective August 1, 1996, Novell Japan assigns to BEA Japan, and BEA
          Japan assumes, all rights and obligations relating to the TUXEDO
          Software that Novell Japan has under the Assumed Contracts.

- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
SoftSolutions Document 4803          PAGE 2                     October 25, 1996
<PAGE>

                         Confidential - Execution Original
- --------------------------------------------------------------------------------

          Novell Japan warrants and represents that it has provided copies of
          all the Assumed Contracts to BEA Japan.

     b.   BEA Japan shall be entitled to all royalties and other payments under
          the Assumed Contracts, or otherwise relating to the distribution or
          support of the TUXEDO Software in Japan, that have not been
          recognized as revenue or collected by Novell Japan prior to August 1,
          1996.  Novell Japan shall:

          i.   immediately inform any customers to whom invoices have been sent
               after August 1, 1996 that they must remit payments to BEA Japan;
          
          ii.  immediately pay to BEA Japan any payments relating to the TUXEDO
               Software that Novell Japan may receive after August 1, 1996 to
               the extent they were not properly recognized as revenue by
               Novell Japan prior to August 1, 1996; and,

          iii. otherwise reasonably assist BEA Japan in promptly collecting all
               payments relating to the TUXEDO Software.
     
     c.   As soon as reasonably practical, but in no event later than November
          8, 1996, Novell Japan and BEA Japan shall jointly send to the TUXEDO
          Software customers in Japan notice letters in the form of Exhibit C
          attached hereto so that the assignment will be perfected.
     
     d.   At the reasonable request of BEA Japan, Novell Japan will participate
          in visits and other contacts to existing TUXEDO Software customers in
          Japan, and send out an assignment agreement, provide billing and
          support records, and otherwise reasonably assist BEA Japan in
          assuming responsibility for those customers.  BEA Japan will make
          commercially reasonable efforts to continue the development,
          marketing and sales efforts to continue the development, marketing and
          sales efforts of the TUXEDO Software in Japan consistent with Section
          8 of the Novell Agreement.

6.   CONTINGENT ASSIGNMENT AND GRANTBACK LICENSE OF INTELLECTUAL PROPERTY 
     RIGHTS.

     a.   Contingent upon BEA converting its license rights to be perpetual
          pursuant to Section 14.2 of the Novell Agreement, as of the date of
          such conversion:
     
          i.   Novell Japan transfers to BEA Japan all right, title and interest
               (including the rights mentioned in Articles 27 and 28 of the
               Japanese Copyright Law) in and to the TUXEDO Software J and the
               Derivative Works of the TUXEDO Software J that are owned by
               Novell Japan under Section 2 above, subject to a perpetual,
               royalty-free, irrevocable, worldwide source code and patent
               license back to Novell Japan to use and sublicense the creations
               and patents for the permitted purposes described in Section 5 of
               the Novell Agreement;
          
          ii.  BEA Japan shall own all right, title, and interest in and to all
               future Derivative Works of the TUXEDO Software J that will be
               created during the term of the perpetual license;
          
          iii. Derivative Works of the TUXEDO Software other than TUXEDO
               Software J shall continue to be governed by the Novell
               Agreement; and,

- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
SoftSolutions Document 4803          PAGE 3                     October 25, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

          iv.  Novell Japan transfers to BEA Japan any of its right, title, and
               interest in to the TUXEDO mark and associated goodwill.
          
          Rights granted pursuant to this Section are subject to rights granted
          by Novell Japan to third parties during any period during which BEA
          Japan's license was non-exclusive as contemplated by Section 8.2 of
          the Novell Agreement and Section 2 above.
      
     b.   BEA Japan hereby grants to Novell Japan a non-exclusive, non-
          transferable, royalty-free license under the intellectual property
          rights in the Derivative Works to the TUXEDO Software J, other than
          Derivative Works relating solely to Add-ons, to distribute (to the
          extent that Novell Japan is licensed to do so by Novell) the NetWare
          version of the TUXEDO Software in Japan.

7.   INDEMNIFICATION BY BEA JAPAN.  BEA Japan shall indemnify, defend and 
     hold Novell Japan harmless from any and all damages, liabilities, costs 
     and expenses incurred by Novell Japan as a result of any claims, 
     judgments, or adjudications arising after July 31, 1996 and related to 
     the Assumed Contracts.
     
8.   INDEMNIFICATION BY NOVELL JAPAN.  Novell Japan shall indemnify,
     defend and hold BEA Japan harmless from any and all damages, 
     liabilities, costs and expenses incurred by BEA Japan as a result of 
     any claims, judgments, or adjudications arising prior to August 1, 
     1996 and related to the Transferred Assets or Assumed Contracts.

9.   HIRING OF NOVELL JAPAN EMPLOYEES.  Novell Japan agrees that BEA or BEA 
     Japan may freely offer to hire any Novell Japan employees whose duties 
     relate principally to the marketing, maintenance, licensing or support 
     of TUXEDO Software.  If any such Novell Japan employee notifies Novell 
     Japan that he or she wishes to transfer to BEA, Novell Japan will 
     request in writing that the employee resign for Novell Japan's reasons, 
     and Novell Japan will make all other commercially reasonably efforts to 
     maximize the pension or other benefits that may be available to the 
     employee.

10.  LEASE AND TRANSFER OF ASSETS.  Until the date of BEA's conversion of the 
     licenses under the Novell Agreement to perpetual licenses ("Conversion 
     Date"), and in consideration of the payments and other consideration 
     provided to Novell Japan under this Agreement, Novell Japan will lease 
     to BEA Japan the Transferred Assets free of any additional charge.  
     Novell Japan has delivered the Transferred Assets to BEA Japan.  BEA 
     Japan assumes all risk and responsibility for the Transferred Assets 
     from the date of their delivery to BEA Japan through the Conversion 
     Date, and all right, title, and interest to the Assets shall remain 
     with Novell until the Conversion Date.  Upon the Conversion Date, 
     Novell Japan will transfer to BEA Japan all right, title, and interest 
     in the Assets.  Novell Japan will execute a bill of sale, and provide 
     any other cooperation, reasonably necessary to perfect or otherwise 
     assist in the transfer.

11.  PAYMENTS.

     a.   In consideration for the rights and assignment set forth in this
          Agreement, BEA Japan shall pay directly to Novell Japan a total of
          US$5.8 million, plus consumption tax thereon, according to the
          schedule set forth below.  If making such payments results in a tax
          or other cost to BEA or BEA Japan, the parties agree to negotiate in
          good faith an arrangement satisfactory to all parties to account for
          those costs, including making efforts to lawfully minimize or avoid
          such taxes or other costs.

          For August 1, 1996 to March 30, 1997:    US$0.3 million

- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
SoftSolutions Document 4803          PAGE 4                     October 25, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

          For March 31, 1997 to March 30, 1998:       US$2.2 million (US$ 0.55
                                                      million per quarter)

          For March 31, 1998 to March 30, 1999:       US$3.3 million (US$ 0.82
                                                      million per quarter)

     b.   All payments under Section 1.a (including the consumption tax) may
          be deducted from and set off against any payments made by BEA to
          Novell under the Novell Agreement.
     
     c.   The amounts of Section 1.a (including the consumption tax) shall be
          payable to Novell Japan in Japanese yen on a quarterly basis, with
          the first payment payable on December 31, 1996 and subsequent
          payments payable on the last business day of each calendar quarter
          thereafter.  Such amounts shall be converted to Japanese yen based on
          the closing TTS rate quoted by Sumitomo Bank on the last business day
          of each calendar quarter and shall be due within forty-five (45) days
          after such last business day of the calendar quarter.
     
     d.   BEA Japan shall have the right to make prepayment of any of the
          payments specified in this Section 11, due within the following
          twelve months, less a discount rate equal to an annual rate of 8%.
          In the case of prepayment which is forty-five (45) days or more
          earlier than the due date, the conversion rate for the previous
          payment shall be used to determine the payment amount.
     
     e.   The guaranty of Warburg, Pincus pursuant to the Novell Agreement
          shall apply to these payments of Section 11.a (including the
          consumption tax).

12.  TERMINATION.  In the event that BEA opts to terminate the Novell 
     Agreement, or in the event the Novell Agreement is properly terminated 
     by Novell pursuant to Section 23.1 of the Novell Agreement, or in the 
     event BEA Japan is in default of this Agreement under the events of 
     default set forth in Section 23.1 of the Novell Agreement modified to 
     apply to this Agreement:

     a.   The exclusive sublicense from Novell Japan to BEA Japan under Section
          2 shall terminate.
     
     b.   BEA Japan shall transfer and reassign, or return in the event of
          termination prior to the Conversion Date, to Novell Japan the
          Transferred Assets in exchange for reasonable consideration from
          Novell Japan, and shall reassign to Novell Japan the Assumed
          Contracts, and all BEA Japan contracts based on rights obtained under
          the Agreement.
     
     c.   Novell Japan shall be free to offer employment to or to hire any BEA
          Japan employee whose duties relate principally to the marketing,
          maintenance, licensing or support of TUXEDO Software.
     
     d.   At the reasonable request of Novell Japan, BEA Japan will participate
          in visits and other contacts to existing TUXEDO Software customers in
          Japan, and send out an assignment agreement, provide billing and
          support records, and otherwise reasonably assist Novell Japan in
          assuming responsibility for those customers.
     
     e.   Termination of this Agreement shall not affect any of BEA Japan's pre-
          termination obligations to BEA Japan customers.  Notwithstanding any
          expiration or termination of this Agreement, unless this Agreement is
          terminated due to a breach by BEA of BEA Japan, (i) BEA Japan and its
          Subsidiaries may distribute a commercially reasonable number of
          copies of TUXEDO Software in stock or in order to fill orders placed
          by end users or resellers prior to the expiration or termination of
          this

- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
SoftSolutions Document 4803          PAGE 5                     October 25, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------
          Agreement during the subsequent ninety (90) days after expiration,
          (ii) those copies of TUXEDO Software in possession of resellers may
          be distributed in accordance with the terms and conditions of this 
          Agreement, and (iii) sublicenses granted pursuant to this Agreement
          shall not be revoked by the expiration or termination of this
          Agreement.

13.  MISCELLANEOUS. This Agreement shall be governed by Utah law.  This 
     Agreement constitutes the entire understanding between the parties with 
     respect to the subject matter hereof, and may only be modified in a 
     writing signed by all parties.  In case of any conflicts between this 
     Agreement and any other contracts of the parties relating to the 
     subject matter hereof, this Agreement shall govern and prevail. This 
     Agreement may be executed in any number of counterparts, all of which 
     shall constitute together one and the same agreement.

     Each of the undersigned represents and warrants that he or she is duly
authorized to sign this Agreement on behalf of the party he or she represents.
Each party has read, understands and agrees to the terms and conditions of this
Agreement.

NOVELL, INC.                       BEA SYSTEMS, INC.

Signature: /s/ Novell, Inc.        Signature: /s/ BEA Systems, Inc.

Name:                              Name:

Title:                             Title:

Date:                              Date


NOVELL JAPAN, LTD.                 BEA SYSTEMS JAPAN, LTD.

Signature:                         Signature:

Name:                              Name:

Title:                             Title:

Date:                              Date:



- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
SoftSolutions Document 4803          PAGE 6                     October 25, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------
                                   EXHIBIT A
                          LIST OF TRANSFERRED ASSETS








- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
Exhibit A, List of Transferred Assets     PAGE A-1              October 24, 1996
<PAGE>


                            [Graphic Table Omitted]


<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

                                   EXHIBIT B
                                TUXEDO SOFTWARE

TUXEDO/T
TUXEDO/T-4.0
TUXEDO/T-4.1
TUXEDO/T-4.1-DRP
TUXEDO Database Manager, Release 4.0
TUXEDO Database Manager, Release 4.1
TUXEDO Database Manager, Release 4.1 Documentation Reproduction Provision
TUXEDO Database Manager, Release 4.2
TUXEDO Enterprise Transaction Processing System Release 4.2 Host Extension
TUXEDO Enterprise Transaction Processing System Release 4.2 Workstation
Extension
TUXEDO Enterprise Transaction Processing System Release 4.2 Add-On Package
TUXEDO Enterprise Transaction Processing System Release 4.2 Add-On Package
Documentation Reproduction Provision
TUXEDO Enterprise Transaction Processing System Release 4.2 Database Manager
TUXEDO Enterprise Transaction Processing System Release 4.2 Japanese Features
of Transaction Monitor
TUXEDO Enterprise Transaction Processing Span Release 4.2 Japanese Features of
Workstation Extension
TUXEDO Enterprise Transaction Processing System Release 4.2 Regression Package
TUXEDO Enterprise Transaction Processing System Release 4.2 Transaction Monitor
TUXEDO Enterprise Transaction Processing System Release 4.2 Transaction Monitor
Documentation Reproduction Provision
TUXEDO Enterprise Transaction Processing System Release 4.2 Transaction Monitor
Japanese Documentation Reproduction Provision
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Transaction
Monitor
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Add-On Package
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Workstation
Extension
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Transaction
Monitor Japanese Features
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Add-On Package
Japanese Features
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Workstation
Extension Japanese Features
TUXEDO Enterprise Transaction Processing System Release 4.2.1 Transaction
Monitor Japanese Documentation Reproduction Provision
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Transaction
Monitor
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Add-On Package
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Workstation
Extension
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Transaction
Monitor Japanese Features
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Add-On Package
Japanese Features
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Workstation
Extension Japanese Features
TUXEDO Enterprise Transaction Processing System Release 4.2.2 Transaction
Monitor Japanese Documentation Reproduction Provision
Software Subscription Agreement
TUXEDO Enterprise Transaction Processing System Release 5
TUXEDO Enterprise Transaction Processing System Release 5 Japanese Features
TUXEDO Enterprise Transaction Processing System Release 5 Transaction Monitor
Documentation  Reproduction Provision
TUXEDO Golden Master Agreement
TUXEDO Branding Program
TUXEDO Enterprise Transaction Processing System Training Distributorship
Agreement
Other TUXEDO Products



- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
Exhibit B, TUXEDO Software           PAGE B-1                   October 24, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

                                   EXHIBIT C
                             FORM OF NOTICE LETTER









- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
Exhibit C, Form of Notice Letter     PAGE C-1                   October 24, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

[DATE]

Company Name
Company Address

Dear Licensee:

Novell, Inc. ("NOVELL"), a parent company of Novell Japan, Ltd. ("NOVELL KK"),
has exclusively licensed its TUXEDO software to BEA Systems, Inc. ("BEA").

Attachment A to this letter lists those Licensed Products that have been
licensed in source code form to Japanese customers by NOVELL KK.  Among the
products included in Attachment A are the specific products (collectively
"Licensed Products") for which Company Name ("Licensee") is currently
sublicensed by NOVELL KK under a Software Agreement and, in some cases, a
Sublicensing Agreement and/or Software Services Agreement, as such agreements
may have been amended and/or supplemented from time to time (collectively
"Customer Agreements").

In connection with such licenses of the TUXEDO software, NOVELL KK has
exclusively sublicensed to BEA Systems Japan, Ltd. ("BEA KK"), a Japanese
corporation and a wholly owned subsidiary of BEA, certain of NOVELL KK's
licensing activities with respect to Japanese customers.  Accordingly, upon
NOVELL KK's receipt of Licensee's written concurrence, the parties hereto agree
as follows:

(1)  As of August 1, 1996, NOVELL KK hereby assigns to BEA KK all of its rights
under Customer Agreements with respect to the Licensed Products.  BEA KK hereby
assumes all obligations of NOVELL KK under the Customer Agreements with respect
to the Licensed Products on the same day.

(2)  Licensee hereby consents to the assignment and assumption mentioned in
Paragraph (1) hereof and releases NOVELL KK from any obligations arising under
the Customer Agreements with respect to the Licensed Products which are
required to be performed on and after August 1, 1996.

(3)  The parties hereto confirm that Licensee's rights under the Customer
Agreements with respect to the Licensed Products shall continue until the date
when all royalties which have been pre-paid by Licensee and which are
creditable with respect to the Licensed Products pursuant to the Customer
Agreements have been credited.




- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
Exhibit C, Form of Notice Letter     PAGE C-2                   October 24, 1996
<PAGE>

                       Confidential - Execution Original
- --------------------------------------------------------------------------------

(4)  For all payments on and after August 1, 1996, Licensee agrees to send all
required payments for the Licensed Products under such Customer Agreements
together with any applicable fee payments by bank wire transfer to:

                        Bank of Tokyo-Mitsubishi, Ltd.
                              Minato-mirai Branch
                      Account of BEA Systems Japan, Ltd.
                                A/C No: 0114243
                      2-1, Minato-mirai 2-chome, Nishi-ku
                             Yokohama 220-81 Japan
                    Tel: (045) 224-1211 Fax: (045) 224-1215


(5)  Licensee agrees to send any correspondence relating to the Licensed
Products and BEA KK Products to BEA KK at the following address:

                            BEA Systems Japan, Ltd.
                 The Landmark Tower of Yokohama Bldg 3Oth Fl.
                        2-2-1-1, Minatomirai, Nishi-ku,
                             Yokohama 220-81 Japan
                    Tel: (045) 224-1250 Fax: (045) 224-1251


[SIGNATURE BY NOVELL KK AND BEA KK]






- --------------------------------------------------------------------------------
Japanese TUXEDO Agreement                                           Novell Japan
Exhibit C, Form of Notice Letter     PAGE C-3                   October 24, 1996


<PAGE>
                                                                  EXHIBIT 10.10

                              BEA ENTERPRISES, INC.

                            STOCK PURCHASE AGREEMENT


        This Agreement is made as of September 28, 1995 among BEA 
Enterprises, Inc., a Delaware corporation (the "Company") located at 2465 E. 
Bayshore Road, Suite 301, Palo Alto, CA 94303, and Warburg, Pincus Ventures, 
L.P., a Delaware limited partnership (the "Purchaser").

                                    RECITALS
                                    --------

   A.   Purchaser has also entered into that certain Option Agreement dated 
July 27, 1995 for the purchase of all of the outstanding stock of Information 
Management Company, a Delaware corporation ("IMC").  Purchaser desires to 
assign its right to acquire the outstanding stock of IMC to the Company, and 
the Company desires to accept such assignment and to consummate the purchase 
of all of the outstanding stock of IMC (the "IMC Transaction") in accordance 
with a stock purchase agreement to be entered into among the Company and the 
stockholders of IMC concurrently with the execution and delivery of this 
Agreement by Purchaser and the Company.

   B.   Purchaser also has entered into that certain Option Agreement dated 
August 14, 1995 for the purchase of TWL Holding's ("TWL") stock in 
Independent Technologies, Inc. a Delaware corporation ("ITI").  Purchaser 
desires to assign its right to acquire the outstanding stock of ITI from TWL 
to the Company, and the Company desires to accept such assignment and to 
consummate the purchase of the outstanding stock of ITI (the "ITI 
Transaction") in accordance with a stock purchase agreement or merger 
agreement to be entered into among the Company, TWL and ITI.

   C.   The Company has entered an agreement to purchase certain assets of VI 
Systems, Inc. (the "VI Transaction"). 

   D.   Purchaser desires to purchase certain shares of the Company's Series 
A Preferred Stock, the Company's Series B Preferred Stock and the Company's 
Common Stock and the Company desires to issue and sell such shares to 
Purchaser to enable the Company to consummate the IMC Transaction, the ITI 
Transaction, the VI Transaction and future acquisitions by the Company as 
mutually agreed to by Purchaser and the Company.

   NOW, THEREFORE, the parties hereto agree as follows:


                                       1
<PAGE>

                                    AGREEMENT
                                    ---------

                                    SECTION I

                     AUTHORIZATION AND SALE OF PREFERRED STOCK

        1.1   AUTHORIZATION.  The Company will authorize the sale and 
issuance of (i) up to 20,000,000 shares of its Series A Preferred Stock (the 
"Series A Preferred"), having the rights, preferences, privileges and 
restrictions as set forth in the Certificate of Amendment of the Certificate 
of Incorporation (the "Certificate") in the form attached to this Agreement 
as EXHIBIT A, and (ii) up to 20,000,000 shares of Series B Preferred Stock 
(the "Series B Preferred") having the rights, preferences, privileges and 
restrictions as set forth in the Certificate.  

        1.2   SALE OF PREFERRED AND COMMON.

              (a) Subject to the terms and conditions hereof, the Company will 
issue and sell to Purchaser at the first Closing (as defined below), and 
Purchaser will buy from the Company at the first Closing, (i) 7,900,000 
shares of Series A Preferred for a purchase price of $1.70 per share for an 
aggregate purchase price of $13,430,000; (ii) 1,000,000 shares of the 
Company's Common Stock ("Common Stock") for a purchase price of $.57 per 
share for an aggregate purchase price of $570,000.  Purchaser also intends to 
purchase shares of Series B Preferred in the future as described in paragraph 
(b) of this Section 1.2.  For purposes of this Agreement, shares of Series A 
Preferred and/or Series B Preferred shall be referred to as the "Preferred 
Shares," shares of Series A Preferred, Series B Preferred and Common Stock 
shall be referred to as the "Shares."  The aggregate purchase price to be 
paid for the Series A Preferred and Common Stock at the First Closing shall 
be referred to as the "Purchase Price."

              (b) Subject to the terms and conditions hereof, the Company 
will issue and sell to Purchaser, and the Purchaser will buy from the 
Company, such additional shares of Preferred Shares and Common Stock at such 
time and at the purchase price as mutually agreed to by the Company and 
Purchaser which additional investments will be reflected on the Schedule of 
Investments attached hereto as EXHIBIT B, which exhibit will be modified to 
reflect additional capital investments upon the mutual consent of the Company 
and Purchaser.  The Company's agreement with respect to closing each purchase 
are separate agreements, and each sale of the Stock to the Purchaser are 
separate sales.

                                     SECTION II
                                           
                               CLOSING DATES; DELIVERY

        2.1   CLOSING DATES.  The first closing of the purchase and sale of 
the hereunder shall be held at the offices of Morrison & Foerster, 1290 
Avenue of the Americas, New York, New York, 10104-0185, concurrently with the 
closing of the IMC Transaction (the "first 


                                      2
<PAGE>

Closing") or at such other time and place upon which the Company and 
Purchaser shall agree (the date of the first Closing is hereinafter referred 
to as the "Closing Date").

        2.2   SUBSEQUENT CLOSINGS.  The Company may, at its option, schedule 
additional closings (the "Additional Closings") after the first Closing has 
been completed on such date or dates as the Company may determine, but not 
later than September 30, 1998.  The date of each Additional Closing is 
hereinafter referred to as an "Additional Closing Date."  The first Closing 
and each Additional Closing are sometimes referred to herein individually as 
a "Closing" and the first Closing Date and each Additional Closing Date are 
sometimes referred to herein individually as a "Closing Date."

        2.3   DELIVERY.

              (a) At the first Closing, the Company shall deliver to Purchaser 
certificates, registered in such Purchaser's name, representing the Series A 
Preferred and Common Stock against payment of the Purchase Price therefor, 
which shall be paid (i) as to $10,880,000 wire transfer per the Company's 
instructions; (ii) as to $860,000 in the form of a credit for amounts paid by 
Purchaser to the Company pursuant to that certain Agreement, dated as of 
September 18, 1995, between the Company and Purchaser regarding the VI 
Transaction; (iii) as to $1,000,000 in the form of a credit for amounts 
previously paid to the stockholders of IMC as an option payment in connection 
with the IMC Transaction; (iv) as to $500,000 in the form of a credit for 
amounts previously paid to TWL Holdings as an option payment in connection 
with the ITI Transaction; (v) as to $200,000 in the form of a credit for 
amounts paid by Purchaser to the Company pursuant to that certain Agreement, 
dated as of September 27, 1995, between the Company and the Purchaser; and 
(vi) as to $560,000 in the form of previous advances to the Company.  

              (b) At each Additional Closing, the Company shall deliver to 
each Purchaser a certificate or certificates, registered in such Purchaser's 
name set forth on the Schedule of Purchasers, representing the number of 
Shares designated on the Schedule of Purchasers to be purchased by such 
Purchaser, against payment of the purchase price therefor, by check payable 
to the Company or wire transfer per the Company's instructions.

                                  SECTION III
                                           
                    REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        Except as set forth on EXHIBIT C attached hereto ("Schedule of 
Exceptions"), the Company represents and warrants to Purchaser as follows:

        3.1   ORGANIZATION AND STANDING; CERTIFICATE AND BY-LAWS.  The 
Company is a corporation duly organized and existing under, and by virtue of, 
the laws of the State of Delaware and is in good standing under such laws.  
The Company has requisite corporate power and authority to own and operate 
its properties and assets, and to carry on its business as 


                                      3
<PAGE>

currently conducted and as proposed to be conducted.  The Company is not 
currently qualified to do business as a foreign corporation in any 
jurisdiction, except for California, and the failure to be so qualified will 
not have a material adverse affect on the Company's business as now 
conducted.  The Company has furnished Purchaser with copies of its 
Certificate of Incorporation and By-Laws, as amended.  Said copies are true, 
correct and complete and contain all amendments through the Closing Date.

        3.2   CORPORATE POWER.  The Company has all requisite legal and 
corporate power and authority to execute and deliver this Agreement, the 
Investor Rights Agreement in the form attached hereto as EXHIBIT D (the 
"Rights Agreement"), and the Shareholders Agreement in the form attached 
hereto as EXHIBIT E (the "Shareholders Agreement") to sell and issue the 
Shares hereunder, to issue the Common Stock issuable upon conversion of the 
Series A Preferred, and to carry out and perform all of its obligations under 
the terms of this Agreement and such other agreements and instruments.

        3.3   SUBSIDIARIES.  The Company has no subsidiaries or affiliated 
companies and does not otherwise control, directly or indirectly, or have any 
ownership interest in any corporation, partnership, business trust, 
association or business entity.

        3.4   CAPITALIZATION.  The authorized capital stock of the Company 
consists, or will, upon the filing of the Certificate and immediately prior 
to the First Closing, consist, of 40,000,000 shares of Common Stock, $0.001 
par value, of which 1,525,000 shares will be issued and outstanding 
immediately prior to the First Closing, and 36,784,000 shares of Preferred 
Stock, $0.001 par value, of which (i) 18,066,000 shares have been designated 
"Series A Preferred," of which no shares will be issued and outstanding 
immediately prior to the First Closing; and (ii) 18,718,000 shares have been 
designated "Series B Preferred," of which no shares will be issued and 
outstanding immediately prior to the First Closing.  All outstanding shares 
have been duly authorized and validly issued, are fully paid and 
nonassessable, were issued in compliance with all federal and state 
securities laws, and were not issued in violation of any preemptive rights.  
The Company has reserved 18,066,000 shares of Series A Preferred for issuance 
hereunder and 18,718,000 shares of Series B Preferred for issuance hereunder 
1,000,000 shares of Common for issuance hereunder, 36,784,000 shares of 
Common Stock for issuance upon conversion of the authorized Series A and 
Series B Preferred Stock and 3,300,000 shares of its Common Stock for 
issuance to employees, consultants, or directors under stock plans or 
arrangements approved by the Board of Directors.  The Series A Preferred and 
Series B Preferred shall have the rights, preferences, privileges and 
restrictions set forth in the Certificate.  Except as set forth above, there 
are no other authorized or outstanding subscription, warrant, option or other 
rights or commitments (including, without limitation, preemptive rights or 
rights of first refusal) to purchase or acquire from the Company any shares 
of any class of capital stock of the Company or securities convertible into 
or exchangeable for such capital stock.  The Company is under no duty to 
redeem or to repurchase any shares of any class or series of stock.



                                      4
<PAGE>

        3.5   AUTHORIZATION.  All corporate action on the part of the 
Company, its directors and stockholders necessary for the authorization, 
execution, delivery and performance of this Agreement and the Rights 
Agreement by the Company, the authorization, sale, issuance and delivery of 
the Shares and the Common Stock issuable upon conversion of the Series A 
Preferred and the performance of all of the Company's obligations hereunder 
and thereunder has been taken or will be taken prior to the Closing.  Each of 
this Agreement, the Shareholders Agreement and the Rights Agreement, when 
each is executed and delivered by the Company, shall constitute a valid and 
binding obligation of the Company, enforceable in accordance with its terms, 
except as the indemnification provisions of Section 5.7 of the Rights 
Agreement may be limited by principles of public policy, and subject to laws 
of general application relating to bankruptcy, insolvency and the relief of 
debtors and rules of law governing specific performance, injunctive relief or 
other equitable remedies.  The Shares, when issued in compliance with the 
provisions of this Agreement, will be validly issued, fully paid and 
nonassessable, and will have the rights, preferences, privileges and 
restrictions described in the Certificate.  The Common Stock issuable upon 
conversion of the Series A Preferred has been duly and validly reserved and, 
when issued in compliance with the provisions of this Agreement and the 
Certificate will be validly issued, fully paid and nonassessable.  The 
issuance and delivery of the Shares, in accordance with this Agreement, and 
the Common Stock issuable upon conversion of the Series A Preferred Shares, 
as applicable, is not subject to any preemptive or other similar rights or 
any liens or encumbrances; provided, however, that the Shares and the Common 
Stock issuable upon conversion of the Series A Preferred, as applicable, may 
be subject to restrictions on transfer under state and/or federal securities 
laws as set forth herein or in the Rights Agreement.

        3.6   COMPLIANCE WITH OTHER INSTRUMENTS, NONE BURDENSOME, ETC. The 
Company is not in breach or violation of any term of its Certificate of 
Incorporation or By-Laws, of any term or provision of any mortgage, deed of 
trust, indebtedness, indenture, contract, agreement, instrument, judgment or 
decree, or any order, statute, rule or regulation, in each case where such 
breach or violation would have a material adverse effect on the Company.  No 
event or failure of performance has occurred that, with the passage of time 
or the giving of notice, would constitute such a breach or violation by the 
Company.  The execution, delivery and performance of and compliance with this 
Agreement, the Shareholders Agreement and the Rights Agreement and the 
issuance, sale and delivery of the Shares, in accordance with this Agreement, 
and the Common Stock issuable upon conversion of the Series A Preferred do 
not conflict with, and will not result in a breach or violation of the terms, 
conditions or provisions of, or constitute a default (or an event that, with 
the giving of notice or passage of time, or both, could result in a default) 
under, or result in the creation or imposition of any lien pursuant to the 
terms of the Company's Certificate of Incorporation or Bylaws, or any 
statute, law, rule or regulation, any state or federal order, judgment or 
decree, or any indenture, mortgage, deed of trust, lease or other agreement 
or instrument to which the Company, or any of its properties, is subject, in 
each case where such conflict, breach, violation, default or lien would have 
a material adverse effect on the Company.


                                      5
<PAGE>

        3.7   LITIGATION, ETC.  There is no action, proceeding or 
investigation pending or threatened (nor to the Company's knowledge is there 
a reasonable basis therefor) against the Company or any of its properties or 
assets or that questions the validity of this Agreement, the Shareholders 
Agreement or the Rights Agreement, or any action taken or to be taken in 
connection herewith.  The foregoing includes, without limitation, actions 
pending or threatened involving the prior employment of any of the Company's 
employees, their use in connection with the Company's business of any 
information or techniques allegedly proprietary to any of their former 
employers, or their obligations under any agreements with prior employers.  
The Company is not a party or subject to the provisions of any order, writ, 
injunction, judgment or decree of any court or government agency or 
instrumentality.  No action, suit or proceeding has been instituted or is 
threatened by the Company.

        3.8   REGISTRATION RIGHTS. Except as set forth in the Rights 
Agreement, the Company is not under any contractual obligation to register 
(as defined in Section 1 of the Rights Agreement) any of its currently 
outstanding securities or any of its securities which hereafter may be issued.

        3.9   CERTAIN TRANSACTIONS. Neither the Company nor, to the Company's 
knowledge, any of its officers has any interest (other than as holders of 
less than 1% of the voting securities of a publicly-traded company), either 
directly or indirectly, in any entity that currently (i) provides any 
services or designs, produces or sells any products or product lines that are 
the same, similar to or competitive with any activity or business in which 
the Company is engaged or proposes to engage; (ii) is a supplier, customer, 
or creditor of the Company; or (iii) has any direct or indirect interest in 
any asset or property, real or personal, tangible or intangible, of the 
Company or any property, real or personal, tangible or intangible, that is 
necessary for the Company's business as currently conducted or proposed to be 
conducted.  No employee, stockholder, officer or director of the Company, or 
their spouses or children, is indebted to the Company, nor is the Company 
indebted to any of them.

        3.10  SECURITIES LAWS; GOVERNMENTAL CONSENT.  Based in part on the 
accuracy of the Purchaser's representations and warranties set forth in 
Section 4, the offer, sale and issuance of the Shares and the Common Stock 
issuable upon conversion of the Series A Preferred as provided in this 
Agreement are exempt from the registration and prospectus delivery 
requirements of the Securities Act of 1933 (the "Securities Act"), and have 
been qualified (or are exempt from qualification) under all applicable state 
securities qualification requirements. Except for the filing of (a) the 
Certificate with the Secretary of State of the State of Delaware, and (b) 
notices required or permitted to be filed after the Closing Date with certain 
United States federal and state securities commissions, which notices the 
Company will file on a timely basis, no consent, approval or authorization 
of, or designation, declaration or filing with, any governmental authority on 
the part of the Company is required in connection with the valid execution, 
delivery and performance of this Agreement or the Rights Agreement, the 
offer, sale or issuance of the Shares (and the issuance of the Common Stock 
issuable upon conversion of the 

                                      6
<PAGE>

Series A Preferred) or the consummation of any other transaction contemplated 
hereby or by the Shareholders Agreement or the Rights Agreement. 

        3.11  DISCLOSURE.  The Company has fully provided Purchaser with all 
the information that the Purchasers have requested for the purpose of 
deciding whether to purchase the Shares pursuant to the terms of this 
Agreement.  This Agreement with the Exhibits hereto, when taken as a whole, 
do not contain any untrue statement of a material fact on the part of the 
Company or omit to state a material fact necessary in order to make the 
statements contained herein on the part of the Company not misleading.

                                    SECTION IV
                                           
                   REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

        Purchaser hereby severally represents and warrants to the Company 
with respect to the purchase of the Shares pursuant to the terms of this 
Agreement and the Common Stock issuable upon conversion of the Series A 
Preferred (collectively, the "Securities") as follows:

        4.1   INVESTMENT EXPERIENCE.  Purchaser is aware of the Company's 
business affairs and financial condition and has acquired sufficient 
information about the Company to reach an informed and knowledgeable decision 
to acquire the Securities.

        4.2   INVESTMENT INTENT. Purchaser is acquiring the Securities for 
investment only for its own account, and not with the view to, or for resale 
in connection with, any distribution thereof.  Purchaser understands that the 
Securities have not been, and will not be, registered under the Securities 
Act by reason of a specific exemption from the registration provisions of the 
Securities Act, the availability of which depends upon, among other things, 
the bona fide nature of the investment intent of such Purchaser as expressed 
herein.

        4.3   RULE 144.  Purchaser acknowledges that the Securities must be 
held indefinitely unless subsequently registered under the Securities Act or 
unless an exemption from such registration is available.  Purchaser is aware 
of the provisions of Rule 144 promulgated under the Securities Act which 
permit limited resale of shares purchased in a private placement subject to 
the satisfaction of certain conditions, including, among other things, the 
existence of a public market for the shares, the availability of certain 
current public information about the Company, the resale occurring not less 
than two years after the security was last held by the Company or an 
affiliate of the Company, the sale being effected through a "broker's 
transaction" or in transactions directly with a "market maker" and the number 
of shares being sold during any three-month period not exceeding specified 
limitations.

        4.4   NO PUBLIC MARKET. Purchaser understands that no public market 
now exists for any of the securities issued by the Company, and that the 
Company has made no assurances that a public market will ever exist for the 
Company's securities.


                                      7
<PAGE>

        4.5   ACCESS TO DATA.  Purchaser has had an opportunity to discuss 
the Company's business, management and financial affairs with the Company's 
management and the opportunity to review the Company's facilities and 
business plan.  Purchaser has also had an opportunity to ask questions of 
officers of the Company, which questions were answered to its satisfaction.  
Purchaser understands that such discussions, as well as any written 
information issued by the Company, were intended to describe certain aspects 
of the Company's business and prospects which the Company believes to be 
material, but were not a thorough or exhaustive description, except as set 
forth in Section 3 hereof.

        4.6   AUTHORIZATION.  Each of this Agreement and the Rights Agreement 
when executed and delivered by such Purchaser will constitute a valid and 
legally binding obligation of the Purchaser, enforceable in accordance with 
its terms, except as the indemnification provisions of Section 5.7 of the 
Rights Agreement may be limited by principles of public policy, and subject 
to laws of general application relating to bankruptcy, insolvency and the 
relief of debtors and rules of law governing specific performance, injunctive 
relief or other equitable remedies.

                                    SECTION V
                                           
                              CONDITIONS TO CLOSING

        5.1   CONDITIONS TO BOTH THE PURCHASER'S AND THE COMPANY'S 
OBLIGATIONS. The obligations of the Purchaser to purchase and of the Company 
to issue and sell the Shares are subject to the fulfillment, on or prior to 
each Closing Date, of all of the following conditions, any of which may be 
waived in whole or in part by mutual agreement of the Purchasers and the 
Company:

              (a) The Company shall have obtained all consents, permits and 
waivers necessary or appropriate on the part of the Company for consummation 
of the transactions contemplated by this Agreement and the Rights Agreement.  
Except for the notices required to be filed after each Closing Date with 
certain federal and state securities commissions, which notices the Company 
will file on a timely basis, the Company shall have obtained all approvals of 
any federal or state governmental authority or regulatory body that are 
required on the part of the Company in connection with the lawful sale and 
issuance of the Shares and the Common Stock issuable upon conversion of the 
Series A Preferred.

              (b) At each Closing, the purchase of the Shares by Purchaser 
hereunder shall be legally permitted by all laws and regulations to which 
Purchaser or the Company is subject.

              (c) Prior to the first Closing, the Certificate shall have been 
filed with the Secretary of State of the State of Delaware.

              (d) Prior to the first Closing, the Company and Purchaser shall 
have entered into the Rights Agreement.


                                      8
<PAGE>

              (e) The Company, Purchaser and each of the stockholders of the 
Company signatories thereto shall have entered into the Shareholders 
Agreement at the first Closing, which will be amended at Additional Closings 
if additional stockholders have purchased stock; 

              (f) The IMC Transaction shall be closing concurrently with the 
occurrence of the first Closing pursuant to this Agreement, and the terms and 
conditions of the IMC Transaction and the closing thereof shall have approved 
in writing by each of the Company and Purchaser; and  

              (g) Each subsequent Transaction's closing shall occur 
concurrently with each Closing pursuant to this Agreement, and the terms of 
each Transaction and the closing thereof shall have been approved in writing 
by each of the Company and the Purchaser.  

        5.2   ADDITIONAL CONDITIONS TO THE PURCHASER'S OBLIGATIONS.  In 
addition to the conditions set forth in Section 5.1 hereof, Purchaser's 
obligation to purchase the Shares is subject to the fulfillment, on or prior 
to each Closing Date, of all of the following conditions (except as otherwise 
provided below), any of which may be waived in whole or in part by such 
Purchaser:

              (a) The representations and warranties made by the Company in 
Section 3 hereof shall be true and correct when made, and shall be true and 
correct on each Closing Date with the same force and effect as if they had 
been made on and as of the same date, provided that the Company shall be 
entitled to update EXHIBIT C in connection with any Additional Closing.

              (b) The Company shall have performed all obligations and 
conditions herein required to be performed or observed by it on or prior to 
each Closing Date.

              (c) With respect to the first Closing only, the Purchaser shall 
have received from Morrison & Foerster, an opinion letter addressed to them, 
dated the first Closing Date and in substantially the form attached hereto as 
EXHIBIT F.

              (d) The Company shall have delivered to Purchaser a 
certificate, executed by the chief executive officer of the Company and dated 
the Closing Date, and each Additional Closing Date certifying to the 
fulfillment of the conditions specified in Sections 5.1(a), 5.2(a) and 5.2(b).

        5.3   ADDITIONAL CONDITION TO OBLIGATIONS OF THE COMPANY.  In 
addition to the conditions set forth in Section 5.1 hereof, the Company's 
obligation to issue and sell the Shares to the Purchaser is subject to the 
fulfillment to the Company's satisfaction, on or prior to each Closing Date, 
of the following conditions, any of which may be waived in whole or in part 
by the Company:



                                      9
<PAGE>

              (a) The representations and warranties made by Purchaser in 
Section 4 hereof shall be true and correct when made, and shall be true and 
correct on each Closing Date with the same force and effect as if they had 
been made on and as of the same date.

              (b) Purchaser shall have performed all obligations and 
conditions herein required to be performed or observed by it on or prior to 
each Closing Date, including payment of the Purchase Price.

                                    SECTION VI
                                           
                                   MISCELLANEOUS

        6.1   GOVERNING LAW.  This Agreement shall be governed in all 
respects by the laws of the State of California as such laws are applied to 
agreements between California residents entered into and to be performed 
entirely within California.  

        6.2   SURVIVAL.  The representations, warranties, covenants and 
agreements made herein shall survive any investigation made by the Purchaser 
and the closing of the transactions contemplated hereby.  All statements as 
to factual matters contained in any certificate or other instrument delivered 
by or on behalf of the Company pursuant hereto or in connection with the 
transactions contemplated hereby shall be deemed to be representations and 
warranties by the Company hereunder as of the date of such certificate or 
instrument.

        6.3   SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided 
herein, the provisions hereof shall inure to the benefit of, and be binding 
upon, the successors, assigns, heirs, executors and administrators of the 
parties hereto.

        6.4   ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other 
documents delivered pursuant hereto constitute the full and entire 
understanding and agreement between the parties with regard to the subjects 
hereof.  Neither this Agreement nor any provision hereof may be amended, 
changed, waived, discharged or terminated other than by a written instrument 
signed by the party against who enforcement of any such amendment, change, 
waiver, discharge or termination is sought.

        6.5   NOTICES, ETC.  All notices and other communications required or 
permitted hereunder shall be effective upon receipt and shall be in writing 
and may be delivered in person, by telecopy, electronic mail, express 
delivery service or U.S. mail, in which event it may be mailed by 
first-class, certified or registered, postage prepaid, addressed:

              (a) if to Company:    BEA Enterprises, Inc.
                                    2465 E. Bayshore Road, Ste. 301
                                    Palo Alto, CA  94303
                                    Attn: President and Chief Executive Officer
                                           


                                      10
<PAGE>

              (b) if to Purchaser:  Warburg, Pincus Ventures, L.P.
                                    466 Lexington Avenue
                                    New York, NY 10017-3147
                                    Attn: Stewart K.P. Gross
                                           
                  with a copy to:   Michael C. Phillips, Esq.
                                    Morrison & Foerster
                                    755 Page Mill Road
                                    Palo Alto, CA  94304-1018
                                           
or at such other address as the party shall so indicate in accordance with 
this Section 6.5.

        6.6   SEVERABILITY.  If any provision of this Agreement shall be 
judicially determined to be invalid, illegal or unenforceable, the validity, 
legality and enforceability of the remaining provisions shall not in any way 
be affected or impaired thereby.

        6.7   FINDER'S FEES.

              (a) The Company (i) represents and warrants that it has 
retained no finder or broker in connection with the transactions contemplated 
by this Agreement and (ii) hereby agrees to indemnify and to hold the 
Purchasers harmless of and from any liability for any commission or 
compensation in the nature of a finder's fee to any broker or other person or 
firm (and the costs and expenses of defending against such liability or 
asserted liability) for which the Company, or any of its employees or 
representatives, is responsible.  

              (b) The Purchaser (i) represents and warrants that, except for 
Nancy Albertini, it has retained no finder or broker in connection with the 
transactions contemplated by this Agreement and (ii) hereby agrees to 
indemnify and to hold the Company harmless of and from any liability for any 
commission or compensation in the nature of a finder's fee to any broker or 
other person or firm (and the costs and expenses of defending against such 
liability or asserted liability) for which Purchaser, or any of its employees 
or representatives, is responsible, including, without limitation, Nancy 
Albertini.  

        6.8   TITLES AND SUBTITLES.  The titles of the Articles and Sections 
of this Agreement are for convenience of reference only and are not to be 
considered in construing this Agreement.  

        6.9   COUNTERPARTS.  This Agreement may be executed in any number of 
counterparts, each of which shall be an original, but all of which together 
shall constitute one instrument.  

        6.10  DELAYS OR OMISSIONS.  It is agreed that no delay or omission to 
exercise any right, power or remedy accruing to any party upon any breach or 
default of any other party under this Agreement shall impair any such right, 
power or remedy, nor shall it be construed to 


                                      11
<PAGE>

be a waiver of any such breach or default, or any acquiescence therein, or of 
any similar breach or default thereafter occurring; nor shall any waiver of 
any single breach or default be deemed a waiver of any other breach or 
default theretofore or thereafter occurring.  It is further agreed that any 
waiver, permit, consent or approval of any kind or character of any breach or 
default under this Agreement, or any waiver of any provisions or conditions 
of this Agreement must be in writing and shall be effective only to the 
extent specifically set forth in writing, and that all remedies, either under 
this Agreement, by law or otherwise, shall be cumulative and not alternative. 










                                       12
<PAGE>

        6.11  PAYMENT OF FEES AND EXPENSES.  Each party shall be responsible 
for paying its own fees, costs and expenses in connection with this Agreement 
and the transactions herein contemplated.

        6.12  EXHIBITS.  Each of the exhibits and schedules to this Agreement 
are incorporated in the Agreement by this reference.

        IN WITNESS WHEREOF, the parties have caused this Agreement to be duly 
executed and delivered by their proper and duly authorized officers as of the 
day and year first written above.


                                        COMPANY:
                                            
                                        BEA ENTERPRISES, INC.



                                        By: /s/ William T. Coleman III
                                           --------------------------------

                                        Title: President
                                              -----------------------------


                                        PURCHASER:
                                            
                                        WARBURG, PINCUS VENTURES, L.P.



                                        By: /s/ Stuart K. P. Gross
                                           --------------------------------

                                        Title: Partner, Warburg, Pincus & Co.
                                               General Partner
                                              -------------------------------
                                               

                                      13
<PAGE>

                                   EXHIBITS
                                   --------

   EXHIBIT                    NAME
   -------                    ----

      A          Certificate of Amendment to Certificate of Incorporation

      B          Schedule of Investments

      C          Schedule of Exceptions

      D          Investor Rights Agreement

      E          Shareholder Agreement

      F          Opinion of Morrison & Foerster







                                       i
<PAGE>

                                    EXHIBIT B

                              SCHEDULE OF INVESTMENTS
                                           

      Date               Purchase Price                   Shares


September 28, 1995         $570,000               1,000,000 common stock

September 28, 1995         $13,430,000       7,900,000 Series A Preferred Stock
















                                      ii
<PAGE>

                                 FIRST AMENDMENT
                            TO STOCK PURCHASE AGREEMENT


              This First Amendment is made and dated as of  October 31, 1995 
by and between BEA Systems, a Delaware corporation  (formerly known as, BEA 
Enterprises, Inc.) (the "Company") and Warburg, Pincus Ventures, L.P., a 
Delaware limited partnership (the "Purchaser") with respect to that certain 
Stock Purchase Agreement dated September 28, 1995 between the Company and 
Purchaser (the "Agreement") regarding the following facts:

                                    RECITALS

     A.    WHEREAS, pursuant to the terms of the Agreement, Purchase invested 
Fourteen Million Dollars ($14,000,000) in the Company in exchange for 
7,900,000 of the Company's Series A Preferred Stock and 1,000,000 shares of 
the Company's Common Stock.

     B.    WHEREAS, the Agreement contemplates additional investments by
Purchaser in the Company and the Purchaser desires to purchase additional shares
of the Company's Series A Preferred Stock and the Company's Series B Preferred
Stock and the Company desires to issue and sell such shares to Purchaser to
enable the Company to consummate the ITI transaction (as that term is defined in
the Agreement).

                                    AGREEMENT

     NOW THEREFORE, the parties hereto agree as follows:

     1.    PURCHASE AND SALE OF SHARES.  Subject to the terms and conditions 
hereof and of the Agreement, the Company will issue and the Purchaser will 
buy from the Company (a) Three Million Two Hundred Thousand (3,200,000) 
shares of Series A Preferred for a purchase price of $1.70 per share for an 
aggregate purchase price of Five Million Four Hundred Forty Thousand Dollars 
($5,440,000), and (b) Two Million Sixty Thousand (2,060,000) shares of Series 
B Preferred for a purchase price of $1.00 per share for an aggregate purchase 
price of Two Million Sixty Thousand Dollars ($2,060,000).  

     2.    AMENDED EXHIBIT B.  EXHIBIT B to the Agreement is hereby amended 
to reflect the purchase of the shares referenced in paragraph 1 above, which 
amended EXHIBIT B is attached hereto and incorporated herein.

     3.    CLOSING.  The closing of the purchase and sale of shares hereunder 
shall be held on October 31, 1995 and shall constitute an "Additional 
Closing" pursuant to the terms of the Agreement.  

     4.    AGREEMENT CONTINUES.  Except as specifically modified herein, the 
terms and conditions of the Agreement shall remain in full force and effect 
and the Company and Purchaser 


                                       1
<PAGE>

each reaffrim their respective representations and warranties as set forth in 
the Agreement to the extent they apply to each Additional Closing.  

     5.    DEFINITIONS.  Capitalized terms used herein shall have the meanings 
set forth in the Agreement, unless otherwise specifically defined 
herein.


















                                       2
<PAGE>

        6.    COUNTERPARTS.  This First Amendment may be executed in any 
number of counterparts, each of which shall be an original, but all of which 
together shall constitute one instrument.

         IN WITNESS WHEREOF, the parties hereto have caused this First 
Amendment to the Stock Purchase Agreement to be duly executed and delivered 
by their proper and duly authorized officers as of the day and year first 
written above.  

                                         COMPANY:

                                         BEA SYSTEMS, INC.



                                         By: /s/ William T. Coleman III
                                            ----------------------------------

                                         Title: President & CEO
                                               -------------------------------

                                         PURCHASER:

                                         WARBURG, PINCUS VENTURES, L.P.



                                         By: /s/ Stuart K. P. Gross
                                            ----------------------------------

                                         Title: Partner, Warburg, Pincus & Co.
                                                General Partner
                                                -------------------------------
                                                
















                                       3
<PAGE>

                                    EXHIBIT B

                             SCHEDULE OF INVESTMENTS


      DATE              PURCHASE PRICE                 SHARES


September 28, 1995        $570,000             1,000,000 Common Stock

September 28, 1995        $13,430,000     7,900,000 Series A Preferred Stock

October 31, 1995          $5,440,000      3,200,000 Series A Preferred Stock

October 31, 1995          $2,060,000      2,060,000 Series B Preferred Stock





<PAGE>

                               SECOND AMENDMENT
                         TO STOCK PURCHASE AGREEMENT


           This Second Amendment is made and dated as of January 10, 1996 by and
between BEA Systems, a Delaware corporation (formerly known as, BEA
Enterprises, Inc.) (the "Company") and Warburg, Pincus Ventures, L.P., a
Delaware limited partnership (the "Purchaser") with respect to that certain
Stock Purchase Agreement dated September 28, 1995, as amended, between the
Company and Purchaser (the "Agreement") regarding the following facts:

                                   RECITALS

     WHEREAS, the Agreement contemplates additional investments by Purchaser in
the Company and the Purchaser desires to invest an additional $4,000,000 in the
Company and to purchase 4,000,000 additional shares of the Company's Series B
Preferred Stock and the Company desires to issue and sell such shares to
Purchaser.
                                   AGREEMENT

     NOW THEREFORE, the parties hereto agree as follows:

     1.    PURCHASE AND SALE OF SHARES.  Subject to the terms and conditions 
hereof and of the Agreement, the Company will issue and the Purchaser will 
buy from the Company Four (4,000,000) shares of Series B Preferred for a 
purchase price of $1.00 per share for an aggregate purchase price of Four 
Million Dollars ($4,000,000).  

     2.    AMENDED EXHIBIT B.  EXHIBIT B to the Agreement is hereby amended 
to reflect the purchase of the shares referenced in paragraph 1 above, which 
amended EXHIBIT B is attached hereto and incorporated herein.

     3.    CLOSING.  The closing of the purchase and sale of shares hereunder 
shall be held on January 8, 1996 and shall constitute an "Additional Closing" 
pursuant to the terms of the Agreement.  

     4.    AGREEMENT CONTINUES.  Except as specifically modified herein, the 
terms and conditions of the Agreement shall remain in full force and effect 
and the Company and Purchaser each reaffirm their respective representations 
and warranties as set forth in the Agreement to the extent they apply to each 
Additional Closing.  

     5.    DEFINITIONS.  Capitalized terms used herein shall have the 
meanings set forth in the Agreement, unless otherwise specifically defined 
herein.


                                       1
<PAGE>

     6.    COUNTERPARTS.  This Second Amendment may be executed in any number 
of counterparts, each of which shall be an original, but all of which 
together shall constitute one instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment 
to the Stock Purchase Agreement to be duly executed and delivered by their 
proper and duly authorized officers as of the day and year first written above.


                                       COMPANY:

                                       BEA SYSTEMS, INC.



                                         By: /s/ William T. Coleman III
                                            ----------------------------------

                                         Title: President
                                               -------------------------------

                                         PURCHASER:

                                         WARBURG, PINCUS VENTURES, L.P.



                                         By: /s/ Stuart K. P. Gross
                                            ----------------------------------


                                         Title: Partner, Warburg, Pincus & Co.
                                                General Partner
                                               -------------------------------
                                                












                                       2
<PAGE>

                                    EXHIBIT B

                            SCHEDULE OF INVESTMENTS


       DATE              PURCHASE PRICE                   SHARES


September 28, 1995         $570,000             1,000,000 Common Stock

September 28, 1995         $13,430,000       7,900,000 Series A Preferred Stock

October 31, 1995           $5,440,000        3,200,000 Series A Preferred Stock

October 31, 1995           $2,060,000        2,060,000 Series B Preferred Stock

November 30, 1995          NC -split shares  1,000,000 Common Stock

January 10, 1996           $4,000,000        4,000,000 Series B Preferred Stock

<PAGE>

                                THIRD AMENDMENT
                          TO STOCK PURCHASE AGREEMENT


           This Third Amendment is made and dated as of April 16, 1996 by and 
between BEA Systems, Inc. a Delaware corporation  (formerly known as, BEA 
Enterprises, Inc.) (the "Company") and Warburg, Pincus Ventures, L.P., a 
Delaware limited partnership (the "Purchaser") with respect to that certain 
Stock Purchase Agreement dated September 28, 1995, as amended, between the 
Company and Purchaser (the "Agreement") regarding the following facts:

                                    RECITALS

     WHEREAS, the Agreement contemplates additional investments by Purchaser 
in the Company and the Purchaser desires to invest an additional $5,000,000 
in the Company and to purchase an additional 174,150 additional shares of the 
Company's Series A Preferred Stock and an additional 4,703,945 shares of the 
Company's Series B Preferred Stock and the Company desires to issue and sell 
such shares to Purchaser.

                                    AGREEMENT

     NOW THEREFORE, the parties hereto agree as follows:

     1.    PURCHASE AND SALE OF SHARES.  Subject to the terms and conditions 
hereof and of the Agreement, the Company will issue and the Purchaser will 
buy from the Company (i) One Hundred Seventy Four Thousand One Hundred and 
Fifty (174,150) shares of Series A Preferred for a purchase price of $1.70 
per share for an aggregate purchase price of Two Hundred Ninety Six Thousand 
Fifty Five Dollars ($296,055), and (ii) Four Million Seven Hundred and Three 
Thousand Nine Hundred and Forty Five (4,703,945) shares of Series B Preferred 
for a purchase price of $1.00 per share for an aggregate purchase price of 
Four Million Seven Hundred and Three Thousand Nine Hundred and Forty Five 
dollars ($4,703,945).

     2.    AMENDED EXHIBIT B.  EXHIBIT B to the Agreement is hereby amended 
to reflect the purchase of the shares referenced in paragraph 1 above, which 
amended EXHIBIT B is attached hereto and incorporated herein.

     3.    CLOSING.  The closing of the purchase and sale of shares hereunder 
shall be held on April 16, 1996 and shall constitute an "Additional Closing"  
pursuant to the terms of the Agreement.  

     4.    AGREEMENT CONTINUES.  Except as specifically modified herein, the 
terms and conditions of the Agreement shall remain in full force and effect 
and the Company and Purchaser each reaffirm their respective representations 
and warranties as set forth in the Agreement to the extent they apply to each 
Additional Closing.


                                       1
<PAGE>

     5.    DEFINITIONS.  Capitalized terms used herein shall have the 
meanings set forth in the Agreement, unless otherwise specifically defined 
herein.

     6.    COUNTERPARTS.  This Third Amendment may be executed in any number 
of counterparts, each of which shall be an original, but all of which 
together shall constitute one instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to
the Stock Purchase Agreement to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first written above.  


                                       COMPANY:

                                       BEA SYSTEMS, INC.



                                         By: /s/ William T. Coleman III
                                            ----------------------------------

                                         Title: President & CEO
                                               -------------------------------

                                         PURCHASER:

                                         WARBURG, PINCUS VENTURES, L.P.



                                         By: /s/ Stuart K. P. Gross
                                            ----------------------------------

                                         Title: Partner, Warburg, Pincus & Co.
                                                General Partner
                                               -------------------------------
                                                









                                       2
<PAGE>

                                   EXHIBIT B

                            SCHEDULE OF INVESTMENTS


        DATE         PURCHASE PRICE    COMMON      SERIES A     SERIES B
                                       SHARES      SHARES       SHARES


September 28, 1995    $570,000         1,000,000

September 28, 1995    $13,430,000                   7,900,000

October 31, 1995      $5,440,000                    3,200,000

October 31, 1995      $2,060,000                                 2,060,000

November 30, 1995    NC -split shares  1,000,000 

January 10, 1996      $4,000,000                                 4,000,000

April 16, 1996        $5,000,000                      174,150    4,703,945

                   ------------------  ----------  ----------   ----------
Total to Date         $30,500,000      2,000,000   11,274,150   10,763,945



<PAGE>

                                FOURTH AMENDMENT
                           TO STOCK PURCHASE AGREEMENT


           This Fourth Amendment is made and dated as of July 1, 1996 by and 
between BEA Systems, Inc. a Delaware corporation  (formerly known as, BEA 
Enterprises, Inc.) (the "Company") and Warburg, Pincus Ventures, L.P., a 
Delaware limited partnership (the "Purchaser") with respect to that certain 
Stock Purchase Agreement dated September 28, 1995, as amended, between the 
Company and Purchaser (the "Agreement") regarding the following facts:

                                    RECITALS

     WHEREAS, the Agreement contemplates additional investments by Purchaser 
in the Company and the Purchaser desires to invest an additional $4,000,000 
in the Company and to purchase an additional 2,000,000 shares of the 
Company's Common Stock, 1,664,000 additional shares of the Company's Series A 
Preferred Stock and an additional 601,200 shares of the Company's Series B 
Preferred Stock and the Company desires to issue and sell such shares to 
Purchaser.

                                    AGREEMENT

      NOW THEREFORE, the parties hereto agree as follows:

      1.   PURCHASE AND SALE OF SHARES.  Subject to the terms and conditions 
hereof and of the Agreement, the Company will issue and the Purchaser will 
buy from the Company (i) Two Million (2,000,000) shares of Common Stock for a 
purchase price of $.285 per share for an aggregate purchase of Five Hundred 
Seventy Thousand Dollars ($570,000), (ii) One Million Six Hundred Sixty Four 
Thousand (1,664,000) shares of Series A Preferred for a purchase price of 
$1.70 per share for an aggregate purchase price of Two Million Eight Hundred 
Twenty Eight Thousand Eight Hundred Dollars ($2,828,800), and (iii) Six 
Hundred and One Thousand Two Hundred (601,200) shares of Series B Preferred 
for a purchase price of $1.00 per share for an aggregate purchase price of 
Six Hundred and One Thousand Two Hundred Dollars ($601,200).

     2.    AMENDED EXHIBIT B.  EXHIBIT B to the Agreement is hereby amended 
to reflect the purchase of the shares referenced in paragraph 1 above, which 
amended EXHIBIT B is attached hereto and incorporated herein.

     3.    CLOSING.  The closing of the purchase and sale of shares hereunder 
shall be held on July 1, 1996 and shall constitute an "Additional Closing"  
pursuant to the terms of the Agreement.  

     4.    AGREEMENT CONTINUES.  Except as specifically modified herein, the 
terms and conditions of the Agreement shall remain in full force and effect 
and the Company and Purchaser 


                                      1
<PAGE>

each reaffirm their respective representations and warranties as set forth in 
the Agreement to the extent they apply to each Additional Closing.  

     5.    DEFINITIONS.  Capitalized terms used herein shall have the 
meanings set forth in the Agreement, unless otherwise specifically defined 
herein.

     6.    COUNTERPARTS.  This Fourth Amendment may be executed in any number 
of counterparts, each of which shall be an original, but all of which 
together shall constitute one instrument.

     IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment 
to the Stock Purchase Agreement to be duly executed and delivered by their 
proper and duly authorized officers as of the day and year first written above.


                                        COMPANY:

                                        BEA SYSTEMS, INC.



                                         By: /s/ William T. Coleman III
                                            ----------------------------------

                                         Title: President & CEO
                                               -------------------------------

                                         PURCHASER:

                                         WARBURG, PINCUS VENTURES, L.P.



                                         By: /s/ Stuart K. P. Gross
                                            ----------------------------------

                                         Title: Partner, Warburg, Pincus & Co.
                                                General Partner
                                               -------------------------------
                                                








                                       2
<PAGE>

                                    EXHIBIT B

                             SCHEDULE OF INVESTMENTS


       DATE          PURCHASE PRICE    COMMON     SERIES A    SERIES B
                                       SHARES     SHARES      SHARES


September 28, 1995     $570,000        1,000,000

September 28, 1995    $13,430,000                  7,900,000

October 31, 1995      $5,440,000                   3,200,000

October 31, 1995      $2,060,000                               2,060,000

November 30, 1995    NC -split shares  1,000,000 

January 10, 1996      $4,000,000                               4,000,000

April 16, 1996        $5,000,000                     174,150   4,703,945

July 1, 1996          $4,000,000       2,000,000   1,664,000     601,200

                   ------------------  ---------- ----------- ----------
Total to Date        $34,500,000       4,000,000  12,938,150  11,365,145
<PAGE>

                                   FIFTH AMENDMENT
                             TO STOCK PURCHASE AGREEMENT
                                           

               This Fifth Amendment is made and dated as of September 3, 1996 
by and between BEA Systems, Inc. a Delaware corporation  (formerly known as, 
BEA Enterprises, Inc.) (the "Company") and Warburg, Pincus Ventures, L.P., a 
Delaware limited partnership (the "Purchaser") with respect to that certain 
Stock Purchase Agreement dated September 28, 1995, as amended, between the 
Company and Purchaser (the "Agreement") regarding the following facts:

                                       RECITALS

        WHEREAS, the Agreement contemplates additional investments by 
Purchaser in the Company and the Purchaser desires to invest an additional 
$12,000,000 in the Company and to purchase an additional 4,127,850 additional 
shares of the Company's Series A Preferred Stock and an additional 4,982,655 
shares of the Company's Series B Preferred Stock and the Company desires to 
issue and sell such shares to Purchaser.

                                      AGREEMENT

        NOW THEREFORE, the parties hereto agree as follows:

        1.  PURCHASE AND SALE OF SHARES.  Subject to the terms and conditions 
hereof and of the Agreement, the Company will issue and the Purchaser will 
buy from the Company (i) Four Million One Hundred Twenty Seven Thousand Eight 
Hundred and Fifty (4,127,850) shares of Series A Preferred for a purchase 
price of $1.70 per share for an aggregate purchase price of Seven Million 
Seventeen Thousand Three Hundred Forty Five Dollars ($7,017,345), and (ii) 
Four Million Nine Hundred Eighty Two Thousand Six Hundred and Fifty Five 
(4,982,655) shares of Series B Preferred for a purchase price of $1.00 per 
share for an aggregate purchase price of Four Million Nine Hundred Eighty Two 
Thousand Six Hundred and Fifty Five dollars ($4,982,655).

        2.  AMENDED EXHIBIT B.  EXHIBIT B to the Agreement is hereby amended 
to reflect the purchase of the shares referenced in paragraph 1 above, which 
amended EXHIBIT B is attached hereto and incorporated herein.

        3.  CLOSING.  The closing of the purchase and sale of shares 
hereunder shall be held on September 3, 1996 and shall constitute an 
"Additional Closing" pursuant to the terms of the Agreement.  

        4.  AGREEMENT CONTINUES.  Except as specifically modified herein, the 
terms and conditions of the Agreement shall remain in full force and effect 
and the Company and Purchaser 

                                         1

<PAGE>

each reaffirm their respective representations and warranties as set forth in 
the Agreement to the extent they apply to each Additional Closing.  

        5.  DEFINITIONS.  Capitalized terms used herein shall have the 
meanings set forth in the Agreement, unless otherwise specifically defined 
herein.

        6.  COUNTERPARTS.  This Fifth Amendment may be executed in any number 
of counterparts, each of which shall be an original, but all of which 
together shall constitute one instrument.

        IN WITNESS WHEREOF, the parties hereto have caused this Fifth 
Amendment to the Stock Purchase Agreement to be duly executed and delivered 
by their proper and duly authorized officers as of the day and year first 
written above.  
               
                                        COMPANY:

                                        BEA SYSTEMS, INC.


                                         By: /s/ William T. Coleman III
                                            ----------------------------------

                                         Title: President & CEO
                                               -------------------------------

                                         PURCHASER:

                                         WARBURG, PINCUS VENTURES, L.P.



                                         By: /s/ Stuart K. P. Gross
                                            ----------------------------------

                                         Title: Partner, Warburg, Pincus & Co.
                                                General Partner
                                               -------------------------------
                                                


                                         2

<PAGE>

                                      EXHIBIT B

                               SCHEDULE OF INVESTMENTS

<TABLE>
<CAPTION>

      DATE                    PURCHASE PRICE        COMMON           SERIES A          SERIES B
                                                    SHARES            SHARES            SHARES
<S>                      <C>                       <C>              <C>               <C>

September 28, 1995            $570,000               1,000,000 

September 28, 1995          $13,430,000                                7,900,000

October 31, 1995             $5,440,000                                3,200,000

October 31, 1995             $2,060,000                                                 2,060,000

November 30, 1995         NC-split shares            1,000,000 

January 10, 1996             $4,000,000                                                 4,000,000

April 16, 1996               $5,000,000                                  174,150        4,703,945

July 1, 1996                 $4,000,000              2,000,000         1,664,000          601,200

September 3, 1996           $12,000,000                  0             4,127,850        4,982,655

                          ---------------            ---------         ----------       ----------
Total to Date               $46,500,000              4,000,000         17,066,000       16,347,800

</TABLE>

<PAGE>

                                   SIXTH AMENDMENT
                             TO STOCK PURCHASE AGREEMENT


         This Sixth Amendment is made and dated as of December 18, 1996 by and
between BEA Systems, Inc. a Delaware corporation  (formerly known as, BEA
Enterprises, Inc.) (the "Company") and Warburg, Pincus Ventures, L.P., a
Delaware limited partnership (the "Purchaser") with respect to that certain
Stock Purchase Agreement dated September 28, 1995, as amended, between the
Company and Purchaser (the "Agreement") regarding the following facts:

                                       RECITALS

    WHEREAS, the Agreement contemplates additional investments by Purchaser in
the Company and the Purchaser desires to invest an additional $3,500,000 in the
Company and to purchase an additional 3,500,000 additional shares of the
Company's Series B Preferred Stock and the Company desires to issue and sell
such shares to Purchaser.

                                      AGREEMENT

    NOW THEREFORE, the parties hereto agree as follows:

    1. PURCHASE AND SALE OF SHARES.  Subject to the terms and conditions hereof
and of the Agreement, the Company will issue and the Purchaser will buy from the
Company  Three Million Five Hundred Thousand (3,500,000) shares of Series B
Preferred for a purchase price of $1.00 per share for an aggregate purchase
price of Three Million Five Hundred Thousand Dollars ($3,500,000).

    2. AMENDED EXHIBIT B.  EXHIBIT B to the Agreement is hereby amended to
reflect the purchase of the shares referenced in paragraph 1 above, which
amended EXHIBIT B is attached hereto and incorporated herein.

    3. CLOSING.  The closing of the purchase and sale of shares hereunder shall
be held on December 18, 1996 and shall constitute an "Additional Closing"
pursuant to the terms of the Agreement.

    4. AGREEMENT CONTINUES.  Except as specifically modified herein, the terms
and conditions of the Agreement shall remain in full force and effect and the
Company and Purchaser each reaffirm their respective representations and
warranties as set forth in the Agreement to the extent they apply to each
Additional Closing.

    5. DEFINITIONS.  Capitalized terms used herein shall have the meanings set
forth in the Agreement, unless otherwise specifically defined herein.

                                         -30-

<PAGE>

    6. COUNTERPARTS.  This Sixth Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

    IN WITNESS WHEREOF, the parties hereto have caused this Sixth Amendment to
the Stock Purchase Agreement to be duly executed and delivered by their proper
and duly authorized officers as of the day and year first written above.

                             COMPANY:

                             BEA SYSTEMS, INC.


                             By:    ---------------------------

                             Title: ---------------------------

                             PURCHASER:

                             WARBURG, PINCUS VENTURES, L.P.


                             By:   ----------------------------

                             Title:----------------------------

                                         -31-

<PAGE>
 
<TABLE>
<CAPTION>

                                   EXHIBIT B
 
                            SCHEDULE OF INVESTMENTS
 

       DATE            PURCHASE PRICE     COMMON         SERIES A       SERIES B
                                         SHARES          SHARES         SHARES
<S>                    <C>             <C>             <C>            <S>
September 28, 1995     $   570,000     1,000,000

September 28, 1995     $13,430,000                     7,900,000

October 31, 1995       $ 5,440,000                     3,200,000

October 31, 1995       $ 2,060,000                                    2,060,000

November 30, 1995     NC -split shares 1,000,000

January 10, 1996       $ 4,000,000                                    4,000,000

April 16, 1996         $ 5,000,000                       174,150      4,703,945

July 1, 1996           $ 4,000,000      2,000,000      1,664,000        601,200

September 3, 1996      $12,000,000              0      4,127,850      4,982,655

December 18, 1996      $ 3,500,000              0              0      3,500,000

                       -----------      ---------     ----------      ---------

Total to Date          $50,000,000      4,000,000     17,066,000     19,847,800

</TABLE>

                                     -32-

<PAGE>

<PAGE>
                               BEA SYSTEMS, INC.
                           1997 STOCK INCENTIVE PLAN
 
    1.  PURPOSES OF THE PLAN.  The purposes of this Stock Incentive Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants of the Company and its Parents and Subsidiaries and to promote the
success of the Company's business.
 
    2.  DEFINITIONS.  As used herein, the following definitions shall apply:
 
        (a)  "ADMINISTRATOR" means the Board or any of the Committees appointed
    to administer the Plan.
 
        (b)  "AFFILIATE" and "ASSOCIATE" shall have the respective meanings
    ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
 
        (c)  "APPLICABLE LAWS" means the legal requirements relating to the
    administration of stock incentive plans, if any, under applicable provisions
    of federal securities laws, state corporate and securities laws, the Code,
    the rules of any applicable stock exchange or national market system, and
    the rules of any foreign jurisdiction applicable to Awards granted to
    residents therein.
 
        (d)  "AWARD" means the grant of an Option, SAR, Dividend Equivalent
    Right, Restricted Stock, Performance Unit, Performance Share, or other right
    or benefit under the Plan.
 
        (e)  "AWARD AGREEMENT" means the written agreement evidencing the grant
    of an Award executed by the Company and the Grantee, including any
    amendments thereto.
 
        (f)  "BOARD" means the Board of Directors of the Company.
 
        (g)  "CHANGE IN CONTROL" means a change in ownership or control of the
    Company effected through either of the following transactions:
 
           (i) the direct or indirect acquisition by any person or related group
       of persons (other than an acquisition from or by the Company or by a
       Company-sponsored employee benefit plan or by a person that directly or
       indirectly controls, is controlled by, or is under common control with,
       the Company) of beneficial ownership (within the meaning of Rule 13d-3 of
       the Exchange Act) of securities possessing more than fifty percent (50%)
       of the total combined voting power of the Company's outstanding
       securities pursuant to a tender or exchange offer made directly to the
       Company's stockholders which a majority of the Continuing Directors who
       are not Affiliates or Associates of the offeror do not recommend such
       stockholders accept, or
 
           (ii) a change in the composition of the Board over a period of
       thirty-six (36) months or less such that a majority of the Board members
       (rounded up to the next whole number) ceases, by reason of one or more
       contested elections for Board membership, to be comprised of individuals
       who are Continuing Directors.
 
        (h)  "CODE" means the Internal Revenue Code of 1986, as amended.
 
        (i)  "COMMITTEE" means any committee appointed by the Board to
    administer the Plan.
 
        (j)  "COMMON STOCK" means the common stock of the Company.
 
        (k)  "COMPANY" means BEA Systems, Inc., a Delaware corporation.
 
        (l)  "CONSULTANT" means any person who is engaged by the Company or any
    Parent or Subsidiary to render consulting or advisory services as an
    independent contractor and is compensated for such services.
 
                                       1
<PAGE>
        (m)  "CONTINUING DIRECTORS" means members of the Board who either (i)
    have been Board members continuously for a period of at least thirty-six
    (36) months or (ii) have been Board members for less than thirty-six (36)
    months and were elected or nominated for election as Board members by at
    least a majority of the Board members described in clause (i) who were still
    in office at the time such election or nomination was approved by the Board.
 
        (n)  "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means
    that the provision of services to the Company, a Parent or Subsidiary in any
    capacity of Employee, Director or Consultant, is not interrupted or
    terminated. Continuous Status as an Employee, Director or Consultant shall
    not be considered interrupted in the case of (i) any approved leave of
    absence or (ii) transfers between locations of the Company or among the
    Company, its Parent, any Subsidiary, or any successor in any capacity of
    Employee, Director or Consultant. An approved leave of absence shall include
    sick leave, military leave, or any other authorized personal leave. For
    purposes of Incentive Stock Options, no such leave may exceed ninety (90)
    days, unless reemployment upon expiration of such leave is guaranteed by
    statute or contract.
 
        (o)  "CORPORATE TRANSACTION" means any of the following
    stockholder-approved transactions to which the Company is a party:
 
           (i) a merger or consolidation in which the Company is not the
       surviving entity, except for a transaction the principal purpose of which
       is to change the state in which the Company is incorporated;
 
           (ii) the sale, transfer or other disposition of all or substantially
       all of the assets of the Company (including the capital stock of the
       Company's subsidiary corporations) in connection with the complete
       liquidation or dissolution of the Company; or
 
           (iii) any reverse merger in which the Company is the surviving entity
       but in which securities possessing more than fifty percent (50%) of the
       total combined voting power of the Company's outstanding securities are
       transferred to a person or persons different from those who held such
       securities immediately prior to such merger.
 
        (p)  "DIRECTOR" means a member of the Board.
 
        (q)  "DIVIDEND EQUIVALENT RIGHT" means a right entitling the Grantee to
    compensation measured by dividends paid with respect to Common Stock.
 
        (r)  "EMPLOYEE" means any person, including an Officer or Director, who
    is an employee of the Company or any Parent or Subsidiary of the Company for
    purposes of Section 422 of the Code. The payment of a director's fee by the
    Company shall not be sufficient to constitute "employment" by the Company.
 
        (s)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
    amended.
 
        (t)  "FAIR MARKET VALUE" means, as of any date, the value of Common
    Stock determined as follows:
 
           (i) Where there exists a public market for the Common Stock, the Fair
       Market Value shall be (A) the closing price for a Share for the last
       market trading day prior to the time of the determination (or, if no
       closing price was reported on that date, on the last trading date on
       which a closing price was reported) on the stock exchange determined by
       the Administrator to be the primary market for the Common Stock or the
       Nasdaq National Market, whichever is applicable or (B) if the Common
       Stock is not traded on any such exchange or national market system, the
       average of the closing bid and asked prices of a Share on the Nasdaq
       Small Cap Market for the day prior to the time of the determination (or,
       if no such prices were reported on that date, on
 
                                       2
<PAGE>
       the last date on which such prices were reported), in each case, as
       reported in THE WALL STREET JOURNAL or such other source as the
       Administrator deems reliable; or
 
           (ii) In the absence of an established market of the type described in
       (i), above, for the Common Stock, the Fair Market Value thereof shall be
       determined by the Administrator in good faith.
 
        (u)  "GRANTEE" means an Employee, Director or Consultant who receives an
    Award under the Plan.
 
        (v)  "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
    incentive stock option within the meaning of Section 422 of the Code.
 
        (w)  "NON-QUALIFIED STOCK OPTION" means an Option not intended to
    qualify as an Incentive Stock Option.
 
        (x)  "OFFICER" means a person who is an officer of the Company within
    the meaning of Section 16 of the Exchange Act and the rules and regulations
    promulgated thereunder.
 
        (y)  "OPTION" means a stock option granted pursuant to the Plan.
 
        (z)  "PARENT" means a "parent corporation," whether now or hereafter
    existing, as defined in Section 424(e) of the Code.
 
        (aa)  "PERFORMANCE SHARES" means Shares or an award denominated in
    Shares which may be earned in whole or in part upon attainment of
    performance criteria established by the Administrator.
 
        (bb)  "PERFORMANCE UNITS" means an award which may be earned in whole or
    in part upon attainment of performance criteria established by the
    Administrator and which may be settled for cash, Shares or other securities
    or a combination of cash, Shares or other securities as established by the
    Administrator.
 
        (cc)  "PLAN" means this 1997 Stock Incentive Plan.
 
        (dd)  "RESTRICTED STOCK" means Shares issued under the Plan to the
    Grantee for such consideration, if any, and subject to such restrictions on
    transfer, rights of first refusal, repurchase provisions, forfeiture
    provisions, and other terms and conditions as established by the
    Administrator.
 
        (ee)  "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act
    or any successor thereto.
 
        (ff)  "SAR" means a stock appreciation right entitling the Grantee to
    Shares or cash compensation, as established by the Administrator, measured
    by appreciation in the value of Common Stock.
 
        (gg)  "SHARE" means a share of the Common Stock.
 
        (hh)  "SUBSIDIARY" means a "subsidiary corporation," whether now or
    hereafter existing, as defined in Section 424(f) of the Code.
 
        (ii)  "SUBSIDIARY DISPOSITION" means the disposition by the Company of
    its equity holdings in any subsidiary corporation effected by a merger or
    consolidation involving that subsidiary corporation, the sale of all or
    substantially all of the assets of that subsidiary corporation or the
    Company's sale or distribution of substantially all of the outstanding
    capital stock of such subsidiary corporation.
 
    3.  STOCK SUBJECT TO THE PLAN.
 
        (a) Subject to the provisions of Section 10, below, the maximum
    aggregate number of Shares which may be issued pursuant to Awards initially
    shall be 5,100,000 Shares, and commencing with the first business day of
    each calendar year thereafter beginning with January 2, 1998, such maximum
    aggregate number of Shares shall be increased by a number equal to three and
    one half percent
 
                                       3
<PAGE>
    (3.5%) of the number of Shares outstanding as of December 31 of the
    immediately preceding calendar year. Notwithstanding the foregoing, the
    maximum aggregate number of Shares available for grant of Incentive Stock
    Options shall be 2,500,000 Shares, and such number shall not be subject to
    annual adjustment as described above. The Shares to be issued pursuant to
    Awards may be authorized, but unissued, or reacquired Common Stock.
 
        (b) If an Award expires or becomes unexercisable without having been
    exercised in full, or is surrendered pursuant to an Award exchange program,
    or if any unissued Shares are retained by the Company upon exercise of an
    Award in order to satisfy the exercise price for such Award or any
    withholding taxes due with respect to such Award, such unissued or retained
    Shares shall become available for future grant or sale under the Plan
    (unless the Plan has terminated). Shares that actually have been issued
    under the Plan pursuant to an Award shall not be returned to the Plan and
    shall not become available for future distribution under the Plan, except
    that if unvested Shares are forfeited, or repurchased by the Company at
    their original purchase price, such Shares shall become available for future
    grant under the Plan.
 
    4.  ADMINISTRATION OF THE PLAN.
 
        (a)  PLAN ADMINISTRATOR.
 
           (i) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.  With
       respect to grants of Awards to Directors or Employees who are also
       Officers or Directors of the Company, the Plan shall be administered by
       (A) the Board or (B) a Committee designated by the Board, which Committee
       shall be constituted in such a manner as to satisfy the Applicable Laws
       and to permit such grants and related transactions under the Plan to be
       exempt from Section 16(b) of the Exchange Act in accordance with Rule
       16b-3. Once appointed, such Committee shall continue to serve in its
       designated capacity until otherwise directed by the Board.
 
           (ii) ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
       EMPLOYEES.  With respect to grants of Awards to Employees or Consultants
       who are neither Directors nor Officers of the Company, the Plan shall be
       administered by (A) the Board or (B) a Committee designated by the Board,
       which Committee shall be constituted in such a manner as to satisfy the
       Applicable Laws. Once appointed, such Committee shall continue to serve
       in its designated capacity until otherwise directed by the Board. The
       Board may authorize one or more Officers to grant such Awards and may
       limit such authority as the Board determines from time to time.
 
           (iii) ADMINISTRATION ERRORS.  In the event an Award is granted in a
       manner inconsistent with the provisions of this subsection (a), such
       Award shall be presumptively valid as of its grant date to the extent
       permitted by the Applicable Laws.
 
        (b)  POWERS OF THE ADMINISTRATOR.  Subject to Applicable Laws and the
    provisions of the Plan (including any other powers given to the
    Administrator hereunder), and except as otherwise provided by the Board, the
    Administrator shall have the authority, in its discretion:
 
           (i) to select the Employees, Directors and Consultants to whom Awards
       may be granted from time to time hereunder;
 
           (ii) to determine whether and to what extent Awards are granted
       hereunder;
 
           (iii) to determine the number of Shares or the amount of other
       consideration to be covered by each Award granted hereunder;
 
           (iv) to approve forms of Award Agreement for use under the Plan;
 
           (v) to determine the terms and conditions of any Award granted
       hereunder;
 
                                       4
<PAGE>
           (vi) to amend the terms of any outstanding Award granted under the
       Plan, including a reduction in the exercise price (or base amount on
       which appreciation is measured) of any Award to reflect a reduction in
       the Fair Market Value of the Common Stock since the grant date of the
       Award, provided that any amendment that would adversely affect the
       Grantee's rights under an outstanding Award shall not be made without the
       Grantee's written consent;
 
           (vii) to construe and interpret the terms of the Plan and Awards
       granted pursuant to the Plan;
 
           (viii) to establish additional terms, conditions, rules or procedures
       to accommodate the rules or laws of applicable foreign jurisdictions and
       to afford Grantees favorable treatment under such laws; provided,
       however, that no Award shall be granted under any such additional terms,
       conditions, rules or procedures with terms or conditions which are
       inconsistent with the provisions of the Plan; and
 
           (ix) to take such other action, not inconsistent with the terms of
       the Plan, as the Administrator deems appropriate.
 
        (c)  EFFECT OF ADMINISTRATOR'S DECISION.  All decisions, determinations
    and interpretations of the Administrator shall be conclusive and binding on
    all persons.
 
    5.  ELIGIBILITY.  Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee, Director or Consultant who has been granted an
Award may, if otherwise eligible, be granted additional Awards. Awards may be
granted to such Employees, Directors or Consultants who are residing in foreign
jurisdictions as the Administrator may determine from time to time.
 
    6.  TERMS AND CONDITIONS OF AWARDS.
 
        (a)  TYPE OF AWARDS.  The Administrator is authorized under the Plan to
    award any type of arrangement to an Employee, Director or Consultant that is
    not inconsistent with the provisions of the Plan and that by its terms
    involves or might involve the issuance of (i) Shares, (ii) an Option, a SAR
    or similar right with an exercise or conversion privilege at a fixed or
    variable price related to the Common Stock and/or the passage of time, the
    occurrence of one or more events, or the satisfaction of performance
    criteria or other conditions, or (iii) any other security with the value
    derived from the value of the Common Stock. Such awards include, without
    limitation, Options, SARs, sales or bonuses of Restricted Stock, Dividend
    Equivalent Rights, Performance Units or Performance Shares, and an Award may
    consist of one such security or benefit, or two or more of them in any
    combination or alternative.
 
        (b)  DESIGNATION OF AWARD.  Each Award shall be designated in the Award
    Agreement. In the case of an Option, the Option shall be designated as
    either an Incentive Stock Option or a Non-Qualified Stock Option. However,
    notwithstanding such designation, to the extent that the aggregate Fair
    Market Value of Shares subject to Options designated as Incentive Stock
    Options which become exercisable for the first time by a Grantee during any
    calendar year (under all plans of the Company or any Parent or Subsidiary)
    exceeds $100,000, such excess Options, to the extent of the Shares covered
    thereby in excess of the foregoing limitation, shall be treated as
    Non-Qualified Stock Options. For this purpose, 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 date the Option
    with respect to such Shares is granted.
 
        (c)  CONDITIONS OF AWARD.  Subject to the terms of the Plan, the
    Administrator shall determine the provisions, terms, and conditions of each
    Award including, but not limited to, the Award vesting schedule, repurchase
    provisions, rights of first refusal, forfeiture provisions, form of payment
    (cash,
 
                                       5
<PAGE>
    Shares, or other consideration) upon settlement of the Award, payment
    contingencies, and satisfaction of any performance criteria. The performance
    criteria established by the Administrator may be based on any one of, or
    combination of, increase in share price, earnings per share, total
    stockholder return, return on equity, return on assets, return on
    investment, net operating income, cash flow, revenue, economic value added,
    personal management objectives, or other measure of performance selected by
    the Administrator. Partial achievement of the specified criteria may result
    in a payment or vesting corresponding to the degree of achievement as
    specified in the Award Agreement.
 
        (D)  DEFERRAL OF AWARD PAYMENT.  The Administrator may establish one or
    more programs under the Plan to permit selected Grantees the opportunity to
    elect to defer receipt of consideration upon exercise of an Award,
    satisfaction of performance criteria, or other event that absent the
    election would entitle the Grantee to payment or receipt of Shares or other
    consideration under an Award. The Administrator may establish the election
    procedures, the timing of such elections, the mechanisms for payments of,
    and accrual of interest or other earnings, if any, on amounts or Shares so
    deferred, and such other terms, conditions, rules and procedures that the
    Administrator deems advisable for the administration of any such deferral
    program.
 
        (E)  AWARD EXCHANGE PROGRAMS.  The Administrator may establish one or
    more programs under the Plan to permit selected Grantees to exchange an
    Award under the Plan for one or more other types of Awards under the Plan on
    such terms and conditions as established by the Administrator from time to
    time.
 
        (f)  EARLY EXERCISE.  The Award may, but need not, include a provision
    whereby the Grantee may elect at any time while an Employee Director or
    Consultant to exercise any part or all of the Award prior to full vesting of
    the Award. Any unvested Shares received pursuant to such exercise may be
    subject to a repurchase right in favor of the Company or to any other
    restriction the Administrator determines to be appropriate.
 
        (g)  TERM OF AWARD.  The term of each Award shall be the term stated in
    the Award Agreement, provided, however, that the term of an Incentive Stock
    Option shall be no more than ten (10) years from the date of grant thereof.
    However, in the case of an Incentive Stock Option granted to a Grantee who,
    at the time the Option is granted, 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, the term of the Incentive Stock Option shall be
    five (5) years from the date of grant thereof or such shorter term as may be
    provided in the Award Agreement.
 
        (h)  TRANSFERABILITY OF AWARDS.  Incentive Stock Options 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 and may
    be exercised, during the lifetime of the Grantee, only by the Grantee;
    provided, however, that Grantee may designate a beneficiary of the Grantee's
    Incentive Stock Option in the event of the Grantee's death on a beneficiary
    designation form approved by the Administrator. Other Awards shall be
    transferable to the extent provided in the Award Agreement.
 
        (i)  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
    to grant such Award, or such other date as is determined by the
    Administrator. Notice of the grant determination shall be given to each
    Employee, Director or Consultant to whom an Award is so granted within a
    reasonable time after the date of such grant.
 
                                       6
<PAGE>
    7.  AWARD EXERCISE OR PURCHASE PRICE, CONSIDERATION, TAXES AND RELOAD
OPTIONS.
 
        (a)  EXERCISE OR PURCHASE PRICE.  The exercise or purchase price, if
    any, for an Award shall be as follows:
 
           (i) In the case of an Incentive Stock Option:
 
               (A) granted to an Employee who, at the time of the grant of such
           Incentive Stock Option 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, the per Share exercise price shall be not
           less than one hundred ten percent (110%) of the Fair Market Value per
           Share on the date of grant.
 
               (B) granted to any Employee other than an Employee described in
           the preceding paragraph, the per Share exercise price shall be not
           less than one hundred percent (100%) of the Fair Market Value per
           Share on the date of grant.
 
           (ii) In the case of other Awards, such price as is determined by the
       Administrator.
 
        (b)  CONSIDERATION.  Subject to Applicable Laws, the consideration to be
    paid for the Shares to be issued upon exercise or purchase of an Award
    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). In addition to any other types of consideration the
    Administrator may determine, the Administrator is authorized to accept as
    consideration for Shares issued under the Plan the following:
 
           (i) cash;
 
           (ii) check;
 
           (iii) delivery of Grantee's promissory note with such recourse,
       interest, security, and redemption provisions as the Administrator
       determines as appropriate;
 
           (iv) surrender of Shares or delivery of a properly executed form of
       attestation of ownership of Shares as the Administrator may require
       (including withholding of Shares otherwise deliverable upon exercise of
       the Award) which have a Fair Market Value on the date of surrender or
       attestation equal to the aggregate exercise price of the Shares as to
       which said Award shall be exercised (but only to the extent that such
       exercise of the Award would not result in an accounting compensation
       charge with respect to the Shares used to pay the exercise price unless
       otherwise determined by the Administrator);
 
           (v) delivery of a properly executed exercise notice together with
       such other documentation as the Administrator and the broker, if
       applicable, shall require to effect an exercise of the Award and delivery
       to the Company of the sale or loan proceeds required to pay the exercise
       price; or
 
           (vi) any combination of the foregoing methods of payment.
 
        (c)  TAXES.  No Shares shall be delivered under the Plan to any Grantee
    or other person until such Grantee or other person has made arrangements
    acceptable to the Administrator for the satisfaction of any foreign,
    federal, state, or local income and employment tax withholding obligations,
    including, without limitation, obligations incident to the receipt of Shares
    or the disqualifying disposition of Shares received on exercise of an
    Incentive Stock Option. Upon exercise of an Award, the Company shall
    withhold or collect from Grantee an amount sufficient to satisfy such tax
    obligations.
 
        (d)  RELOAD OPTIONS.  In the event the exercise price or tax withholding
    of an Option is satisfied by the Company or the Grantee's employer
    withholding Shares otherwise deliverable to the Grantee, the Administrator
    may issue the Grantee an additional Option, with terms identical to the
    Award
 
                                       7
<PAGE>
    Agreement under which the Option was exercised, but at an exercise price as
    determined by the Administrator in accordance with the Plan.
 
    8.  EXERCISE OF AWARD.
 
        (a)  PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.
 
           (i) Any Award granted hereunder shall be exercisable at such times
       and under such conditions as determined by the Administrator under the
       terms of the Plan and specified in the Award Agreement.
 
           (ii) An Award shall be deemed to be exercised when written notice of
       such exercise has been given to the Company in accordance with the terms
       of the Award by the person entitled to exercise the Award and full
       payment for the Shares with respect to which the Award is exercised has
       been received by the Company. 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
       stockholder shall exist with respect to Shares subject to an Award,
       notwithstanding the exercise of an Option or other Award. The Company
       shall issue (or cause to be issued) such stock certificate promptly upon
       exercise of the Award. No adjustment will be made for a dividend or other
       right for which the record date is prior to the date the stock
       certificate is issued, except as provided in the Award Agreement or
       Section 10, below.
 
        (b)  EXERCISE OF AWARD FOLLOWING TERMINATION OF EMPLOYMENT, DIRECTOR OR
    CONSULTING RELATIONSHIP.
 
           (i) An Award may not be exercised after the termination date of such
       Award set forth in the Award Agreement and may be exercised following the
       termination of a Grantee's Continuous Status as an Employee, Director or
       Consultant only to the extent provided in the Award Agreement.
 
           (ii) Where the Award Agreement permits a Grantee to exercise an Award
       following the termination of the Grantee's Continuous Status as an
       Employee, Director or Consultant for a specified period, the Award shall
       terminate to the extent not exercised on the last day of the specified
       period or the last day of the original term of the Award, whichever
       occurs first.
 
           (iii) Any Award designated as an Incentive Stock Option to the extent
       not exercised within the time permitted by law for the exercise of
       Incentive Stock Options following the termination of a Grantee's
       Continuous Status as an Employee, Director or Consultant shall convert
       automatically to a Non-Qualified Stock Option and thereafter shall be
       exercisable as such to the extent exercisable by its terms for the period
       specified in the Award Agreement.
 
        (c)  BUYOUT PROVISIONS.  The Administrator may at any time offer to buy
    out for a payment in cash or Shares, an Award previously granted, based on
    such terms and conditions as the Administrator shall establish and
    communicate to the Grantee at the time that such offer is made.
 
    9.  CONDITIONS UPON ISSUANCE OF SHARES.
 
        (a) Shares shall not be issued pursuant to the exercise of an Award
    unless the exercise of such Award and the issuance and delivery of such
    Shares pursuant thereto shall comply with all Applicable Laws, and shall be
    further subject to the approval of counsel for the Company with respect to
    such compliance.
 
        (b) As a condition to the exercise of an Award, the Company may require
    the person exercising such Award to represent and warrant at the time of any
    such exercise that the Shares are being purchased only for investment and
    without any present intention to sell or distribute such Shares if, in the
    opinion of counsel for the Company, such a representation is required by any
    Applicable Laws.
 
                                       8
<PAGE>
    10.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.  Subject to any required
action by the stockholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, 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
or reclassification of the Common Stock, or any other similar event resulting in
an increase or decrease in the number of issued shares of Common Stock. 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 hereof shall be made with respect to, the
number or price of Shares subject to an Award.
 
    11.  CORPORATE TRANSACTIONS/CHANGES IN CONTROL/SUBSIDIARY
DISPOSITIONS.  Except as may be provided in an Award Agreement:
 
        (a) Effective upon the consummation of a Corporate Transaction, all
    outstanding Awards under the Plan shall terminate unless assumed by the
    successor company or its Parent. For the purposes of this subsection, the
    Award shall be considered assumed if, following the Corporate Transaction,
    the Award confers, for each Share subject to the Award immediately prior to
    the Corporate Transaction, (i) the consideration (whether stock, cash, or
    other securities or property) received in the Corporate Transaction by
    holders of Common Stock for each Share subject to the Award held on the
    effective date of the Corporate Transaction (and if holders were offered a
    choice of consideration, the type of consideration chosen by the holders of
    a majority of the outstanding Shares), or (ii) the right to purchase such
    consideration in the case of an Option or similar Award; provided, however,
    that if such consideration received in the Corporate Transaction was 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 the exercise or exchange of the
    Award for each Share subject to the Award to be solely common stock of the
    successor corporation or its Parent equal in fair market value to the per
    share consideration received by holders of Common Stock in the Corporate
    Transaction.
 
        (b) In the event of a Change in Control (other than a Change in Control
    which also is a Corporate Transaction), each Award which is at the time
    outstanding under the Plan shall remain exercisable until the expiration or
    sooner termination of the applicable Award term.
 
        (c) In the event of a Subsidiary Disposition, each Award with respect to
    those Grantees who are at the time engaged primarily in Continuous Status as
    an Employee or Consultant with the subsidiary corporation involved in such
    Subsidiary Disposition which is at the time outstanding under the Plan shall
    remain so exercisable until the expiration or sooner termination of the
    Award term.
 
        (d) For purposes of this plan, awards shall be deemed assumed in a
    Corporate Transaction if (i) the successor corporation or its parent company
    assumes the Company's obligations under the plan and replaces outstanding
    options under the plan with options providing substantially equal value and
    having substantially equivalent provisions as the options granted pursuant
    to this plan; or (ii) the Company or its outstanding securities are acquired
    for cash consideration and the successor corporation or its parent company
    agrees to pay each holder of outstanding options as such options would
    otherwise have become exercisable, the cash consideration per share for
    share of the Company's Common Stock otherwise payable pursuant to such
    Corporate Transaction, less the exercise price per share of such options.
 
    12.  TERM OF PLAN.  The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten (10) years unless sooner
terminated.
 
                                       9
<PAGE>
    13.  AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.
 
        (a) The Board may at any time amend, suspend or terminate the Plan. To
    the extent necessary to comply with Applicable Laws, the Company shall
    obtain stockholder approval of any Plan amendment in such a manner and to
    such a degree as required.
 
        (b) No Award may be granted during any suspension of the Plan or after
    termination of the Plan.
 
        (c) Any amendment, suspension or termination of the Plan shall not
    affect Awards already granted, and such Awards shall remain in full force
    and effect as if the Plan had not been amended, suspended or terminated,
    unless mutually agreed otherwise between the Grantee and the Administrator,
    which agreement must be in writing and signed by the Grantee and the
    Company.
 
    14.  RESERVATION OF SHARES.
 
        (a) The Company, during the term of the Plan, will at all times reserve
    and keep available such number of Shares as shall be sufficient to satisfy
    the requirements of the Plan.
 
        (b) The inability of the Company to obtain authority from any regulatory
    body having jurisdiction, which authority is deemed by the Company's counsel
    to be necessary to the lawful issuance and sale of any Shares hereunder,
    shall relieve the Company of any liability in respect of the failure to
    issue or sell such Shares as to which such requisite authority shall not
    have been obtained.
 
    15.  NO EFFECT ON TERMS OF EMPLOYMENT.  The Plan shall not confer upon any
Grantee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
 
    16.  STOCKHOLDER APPROVAL.  The grant of Incentive Stock Options under the
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted. Such
stockholder approval shall be obtained in the degree and manner required under
Applicable Laws. The Administrator may grant Incentive Stock Options under the
Plan prior to approval by the stockholders, but until such approval is obtained,
no such Incentive Stock Option shall be exercisable. In the event that
stockholder approval is not obtained within the twelve (12) month period
provided above, all Incentive Stock Options previously granted under the Plan
shall terminate.
 
                                       10

<PAGE>

                                  BEA SYSTEMS, INC.

                          1997 EMPLOYEE STOCK PURCHASE PLAN

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

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

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

                   (a) "ACCRUAL PERIOD" means a period of approximately six 
months, commencing on January 1 and July 1 of each year and terminating on 
the next following June 30 or December 31, respectively; provided, however, 
that the first Accrual Period shall commence on the Effective Date and shall 
end on June 30, 1997.

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

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

                   (d) "COMMON STOCK" means the common stock of the Company.

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

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

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

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

                                       1

<PAGE>

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

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

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

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

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

                   (k) "ENROLLMENT DATE" means the first day of each Purchase 
Period.

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

                   (m) "EXERCISE DATE" means the last day of each Accrual 
Period.

                   (n) "FAIR MARKET VALUE" means, as of any date, the value 
of Common Stock determined as follows:

                             (1) Where there exists a public market 
                   for the Common Stock, the Fair Market Value shall be (A) 
                   the closing price for a share of Common Stock for the 
                   last market trading day prior to the time of the 
                   determination (or, if no closing price was reported on 
                   that date, on the last trading date on which a closing 
                   price was reported) on the stock exchange determined by 
                   the Plan Administrator to be the primary market for the 
                   Common Stock or the Nasdaq National Market, whichever is 
                   applicable or (B) if the Common Stock is not traded on 
                   any such exchange or national market system, the average 
                   of the closing bid and asked prices of a share
                   
                                       2

<PAGE>

                   of Common Stock on the Nasdaq Small Cap Market for the day
                   prior to the time of the determination (or, if no such
                   prices were reported on that date, on the last date on which
                   such prices were reported), in each case, as reported in THE
                   WALL STREET JOURNAL or such other source as the Plan
                   Administrator deems reliable; 

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

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

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

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

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

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

                   (s) "PURCHASE PERIOD" means a purchase period established
pursuant to Section 4 hereof.

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

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

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

                3. ELIGIBILITY.

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

                   (b) LIMITATIONS ON GRANT AND ACCRUAL.  Any provisions of 
the Plan to the contrary notwithstanding, no Employee shall be granted an 
option under the Plan (i) if, immediately after the grant, such Employee 
(taking into account stock owned by any other person whose stock


                                       3


<PAGE>

would be attributed to such Employee pursuant to Section 424(d) of the Code) 
would own stock and/or hold outstanding options to purchase stock possessing 
five percent (5%) or more of the total combined voting power or value of all 
classes of stock of the Company or of any Parent or Subsidiary, or (ii) which 
permits his/her rights to purchase stock under all employee stock purchase 
plans of the Company and its Parents or Subsidiaries to accrue at a rate 
which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock 
(determined at the Fair Market Value of the shares at the time such option is 
granted) for each calendar year in which such option is outstanding at any 
time.  The determination of the accrual of the right to purchase stock shall 
be made in accordance with Section 423(b)(8) of the Code and the regulations 
thereunder.  

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


                4. PURCHASE PERIODS.  

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

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

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

                   (d) If on the first day of any Accrual Period in a 
Purchase Period in which a Participant is participating, the Fair Market 
Value of the Common Stock is less than the Fair Market Value of the Common 
Stock on the Enrollment Date of the Purchase Period (after taking

                                       4


<PAGE>

into account any adjustment during the Purchase Period pursuant to Section 
18(a)), the Purchase Period shall be terminated automatically and the 
Participant shall be enrolled automatically in the new Purchase Period which 
has its first Accrual Period commencing on that date, provided the 
Participant is eligible to participate in the Plan on that date and has not 
elected to terminate participation in the Plan.  

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

                5. PARTICIPATION.

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

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

                6. PAYROLL DEDUCTIONS.

                   (a) At the time a Participant files his/her subscription 
agreement, he/she shall elect to have payroll deductions made during the 
Purchase Period in an amount not exceeding ten percent (10%) of the 
Compensation which he/she receives during the Purchase Period.

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

                   (c) A Participant may discontinue his/her participation in 
the Plan as provided in Section 10, or may decrease the rate of his/her 
payroll deductions during the Purchase Period by completing and filing with 
the Company a new subscription agreement authorizing a decrease in the 
payroll deduction rate.  The decrease in rate shall be effective with the 
first full payroll period commencing ten (10) business days after the 
Company's receipt of the new subscription agreement unless the Company elects 
to process a given change in participation more quickly.  A Participant may 
increase the rate of his/her payroll deductions for a future Purchase Period 
by filing with the Company a new subscription agreement authorizing an 
increase in the payroll deduction rate within ten (10) business days (unless 
the Company elects to process a given change in participation more quickly) 
before the commencement of the upcoming Purchase Period.  A Participant's 
subscription agreement shall remain in effect for successive Purchase Periods 
unless terminated as provided in Section 10. The Plan Administrator shall be 
authorized to limit the number of payroll deduction rate changes during any 
Purchase Period.

                                       5


<PAGE>

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

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

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

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

               10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.

                   (a) A Participant may withdraw all but not less than all 
the payroll deductions credited to his/her account and not yet used to 
exercise his/her option under the Plan at any time

                                       6


<PAGE>

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

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

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

               12. STOCK.

                   (a) The maximum number of shares of Common Stock which 
shall be made available for sale under the Plan shall be one million two 
hundred fifty thousand (1,250,000) shares, subject to adjustment upon changes 
in capitalization of the Company as provided in Section 18.  If on a given 
Exercise Date the number of shares with respect to which options are to be 
exercised exceeds the number of shares then available under the Plan, the 
Plan Administrator shall make a pro rata allocation of the shares remaining 
available for purchase in as uniform a manner as shall be practicable and as 
it shall determine to be equitable.

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

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

                                       7


<PAGE>

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

               14. DESIGNATION OF BENEFICIARY.

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

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

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

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

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

               18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE
TRANSACTIONS.

                   (a) ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.  Subject 
to any required action by the stockholders of the Company, the Reserves, as 
well as the Purchase Price, shall be proportionately adjusted for any 
increase or decrease in the number of issued shares of Common

                                       8


<PAGE>

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

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

               19. AMENDMENT OR TERMINATION.

                   (a) The Plan Administrator may at any time and for any 
reason terminate or amend the Plan.  Except as provided in Section 18, no 
such termination can affect options previously granted, provided that a 
Purchase Period may be terminated by the Plan Administrator on any Exercise 
Date if the Plan Administrator determines that the termination of the Plan is 
in the best interests of the Company and its stockholders.  Except as 
provided in Section 18, no amendment

                                       9


<PAGE>

may make any change in any option theretofore granted which adversely affects 
the rights of any Participant.  To the extent necessary to comply with 
Section 423 of the Code (or any successor rule or provision or any other 
applicable law or regulation), the Company shall obtain stockholder approval 
in such a manner and to such a degree as required.

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

               20. NOTICES.  All notices or other communications by a 
Participant to the Company under or in connection with the Plan shall be 
deemed to have been duly given when received in the form specified by the 
Plan Administrator at the location, or by the person, designated by the Plan 
Administrator for the receipt thereof.

               21. CONDITIONS UPON ISSUANCE OF SHARES.  Shares shall not be 
issued with respect to an option unless the exercise of such option and the 
issuance and delivery of such shares pursuant thereto shall comply with all 
applicable provisions of law, domestic or foreign, including, without 
limitation, the Securities Act of 1933, as amended, the Exchange Act, the 
rules and regulations promulgated thereunder, and the requirements of any 
stock exchange upon which the shares may then be listed, and shall be further 
subject to the approval of counsel for the Company with respect to such 
compliance.  As a condition to the exercise of an option, the Company may 
require the Participant to represent and warrant at the time of any such 
exercise that the shares are being purchased only for investment and without 
any present intention to sell or distribute such shares if, in the opinion of 
counsel for the Company, such a representation is required by any of the 
aforementioned applicable provisions of law.  In addition, no options shall 
be exercised or shares issued hereunder before the Plan shall have been 
approved by stockholders of the Company as provided in Section 23.

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

               23. STOCKHOLDER APPROVAL.  Continuance of the Plan shall be 
subject to approval by the stockholders of the Company within twelve (12) 
months before or after the date the Plan is adopted.  If such stockholder 
approval is obtained at a duly held stockholders' meeting, the Plan

                                       10

<PAGE>

must be approved by a majority of the votes cast at such stockholders' 
meeting at which a quorum representing a majority of all outstanding voting 
stock of the Company is, either in person or by proxy, present and voting on 
the Plan.  If such stockholder approval is obtained by written consent, it 
must be obtained by the written consent of the holders of a majority of all 
outstanding voting stock of the Company.  However, approval at a meeting or 
by written consent may be obtained by a lesser degree of stockholder approval 
if the Plan Administrator determines, in its discretion after consultation 
with the Company's legal counsel, that such a lesser degree of stockholder 
approval will comply with all applicable laws and will not adversely affect 
the qualification of the Plan under Section 423 of the Code.

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

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

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

                                       11

<PAGE>

                                      EXHIBIT A
                                  BEA SYSTEMS, INC.
                                           
                          1997 EMPLOYEE STOCK PURCHASE PLAN
                                SUBSCRIPTION AGREEMENT

____     Original Application     Enrollment Date:_____________
____     Change in Payroll Deduction Rate
____     Change of Beneficiary(ies)
                1. I,________________________, hereby elect to participate in
the BEA Systems, Inc. 1997 Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") and subscribe to purchase shares of the Company's Common Stock
in accordance with this Subscription Agreement and the Employee Stock Purchase
Plan.

                2. I hereby authorize payroll deductions from each paycheck in
the amount of ______% of my Compensation on each payday (not to exceed 10%)
during the Purchase Period in accordance with the Employee Stock Purchase Plan. 
(Please note that no fractional percentages are permitted.)

                3. I understand that the payroll deductions shall be
accumulated for the purchase of shares of Common Stock at the applicable
Purchase Price determined in accordance with the Employee Stock Purchase Plan. 
I understand that if I do not withdraw from a Purchase Period, any accumulated
payroll deductions will be used to automatically exercise my option.

                4. I have received a copy of the complete "BEA Systems, Inc.
1997 Employee Stock Purchase Plan." I understand that my participation in the
Employee Stock Purchase Plan is in all respects subject to the terms of the
Plan.  I understand that the grant of the option by the Company under this
Subscription Agreement is subject to obtaining stockholder approval of the
Employee Stock Purchase Plan.

                5. Shares purchased for me under the Employee Stock Purchase
Plan should be issued in the name(s) of: 


                        _________________________________
                        _________________________________


                6. I understand that if I dispose of any shares received by me
pursuant to the Employee Stock Purchase Plan within two (2) years after the
Enrollment Date (the first day of the Purchase Period during which I purchased
such shares) or within one (1) year after the Exercise Date (the date I
purchased such shares), I will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
equal to the excess of the fair market value of the shares on the date such
shares were purchased for me over the price which I paid for the shares.  I
HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF
ANY SUCH DISPOSITION AND I WILL MAKE ADEQUATE PROVISION FOR FOREIGN, FEDERAL,
STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY WHICH ARISE UPON THE
DISPOSITION OF THE COMMON STOCK.  The Company may, but will not be obligated to,
withhold from my compensation the amount necessary to meet any applicable
withholding obligation including any withholding necessary to make available to
the Company any tax deductions or benefits attributable to sale or early
disposition of Common Stock by me.  If I dispose of such shares at any time
after the expiration of the 2-year and 1-year holding periods described above, I
understand that I will be treated for federal income tax purposes as having

                                       1

<PAGE>

received income only at the time of such disposition, and that such income will
be taxed as ordinary income only to the extent of an amount equal to the lesser
of (1) the excess of the fair market value of the shares at the time of such
disposition over the purchase price which I paid for the shares, or (2) 15% of
the fair market value of the shares on the first day of the Purchase Period. 
The remainder of the gain, if any, recognized on such disposition will be taxed
as long-term capital gain.  I also understand that the foregoing income tax
consequences are based on current federal income tax law and that the Company is
not responsible for advising me of any changes in the applicable tax rules.

                7. I hereby agree to be bound by the terms of the Employee
Stock Purchase Plan.  The effectiveness of this Subscription Agreement is
dependent upon my eligibility to participate in the Employee Stock Purchase
Plan.

                8. In the event of my death, I hereby designate the following
as my beneficiary(ies) to receive all payments and shares due me under the
Employee Stock Purchase Plan.

NAME: (Please print)              ---------------------------------------
                                  (First)        (Middle)       (Last)

Relationship:                     ---------------------------------------

Address:
                                  ---------------------------------------

                                  ---------------------------------------

                                  ---------------------------------------

Employee's Social
Security Number:                  ---------------------------------------

Employee's Home Address:     
                                  ---------------------------------------

                                  ---------------------------------------

                                  ---------------------------------------

I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT
SUCCESSIVE PURCHASE PERIODS UNLESS TERMINATED BY ME

Employee's Signature:             ---------------------------------------

Dated:                            ---------------------------------------

Signature of spouse
if beneficiary is other
than spouse:                      ---------------------------------------

Dated:                            ---------------------------------------

                                       2

<PAGE>

                                      EXHIBIT B

                                  BEA SYSTEMS, INC.
                                           
                          1997 EMPLOYEE STOCK PURCHASE PLAN
                                SUBSCRIPTION AGREEMENT
                                 NOTICE OF WITHDRAWAL

                   The undersigned Participant in the Purchase Period of the
BEA Systems, Inc. 1997 Employee Stock Purchase Plan which began on
_________________, 19___, hereby notifies the Company that he or she hereby
withdraws from the Purchase Period.  He or she hereby directs the Company to pay
to the undersigned as promptly as practicable all the payroll deductions
credited to his/her account with respect to such Purchase Period.  The
undersigned understands and agrees that his/her option for such Purchase Period
will be automatically terminated.  The undersigned understands further that no
further payroll deductions will be made for the purchase of shares in the
current Purchase Period and the undersigned shall be eligible to participate in
succeeding Purchase Periods only by delivering to the Company a new Subscription
Agreement.

Name and Address
of Participant:         --------------------------------------------------

                        --------------------------------------------------

                        --------------------------------------------------

Signature:              --------------------------------------------------

Date:


<PAGE>

                                     Confidential treatment has been 
                                     requested regarding the sections 
                                     indicated by [***]

                     MIDDLEWARE ACQUISITION AND LICENSE AGREEMENT
                                    BY AND BETWEEN
                            DIGITAL EQUIPMENT CORPORATION
                                AND BEA SYSTEMS, INC.


    This Middleware License and Acquisition Agreement (the "Agreement") is
entered into and effective as of this 31st day of January, 1997 (the "Execution
Date"), by and between Digital Equipment Corporation, a Massachusetts
corporation with a place of business at 129 Parker Street, Maynard,
Massachusetts  01754 ("Digital"), and BEA Systems, Inc., a Delaware corporation
with a place of business at 385 Moffett Park Drive, Suite 105, Sunnyvale,
California  94089-1208 ("BEA").

1.  STATEMENT OF PURPOSE

    1.1.      Digital desires to sell or license to BEA, and BEA desires to
              purchase or license form Digital, the Middleware Assets through
              the licenses and transfers set forth herein; and

    1.2.      Digital and BEA each desires to enter into the Distribution
              Agreement and the Consulting Services Agreement in connection
              with such licenses and transfers;

    1.3.      NOW, THEREFORE, in consideration of the foregoing and the mutual
              representations, warranties, covenants, agreements and conditions
              set forth in this Agreement, and other good and valuable
              consideration, the receipt and sufficiency of which are hereby
              acknowledged, BEA and Digital agree as follows:

2.  DEFINITIONS

    2.1.      "ASSUMED CONTRACTS" means the contracts set forth on Schedule A
              hereto.

    2.2.      "CLOSING" means the closing of the transactions contemplated by
              this Agreement.

    2.3.      "CLOSING DATE" means, unless otherwise agreed by the parties,
              March 4, 1997, or, if the conditions to Closing have not been met
              as of such date, then on the first Friday after they are met, but
              in any event no later than April 30, 1997.

    2.4.      "CODE" means computer programming code, including the Object Code
              and Source Code of the Software in the form existing as of the
              Closing Date.

    2.5.      "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 8
              hereof.

    2.6.      "CONSULTING SERVICES AGREEMENT" means that certain Consulting
              Services Agreement by and between Digital and BEA deemed to be
              executed as of January 31, 1997, substantially in the form of
              Exhibit I, attached hereto and made a part hereof.

    2.7.      "COPYRIGHTS" means all registered and unregistered copyrights to
              the Software and Documentation and all applications for
              registration thereof.

    2.8.      "CUSTOMER AGREEMENTS" means any and all licenses, leases,
              distribution and maintenance agreements which are in effect on
              the Execution Date whereby Digital

<PAGE>

              has authorized any third party to use or distribute any of the
              Software as of the Closing Date.

    2.9.      "DESKTOP" means the product currently in development known as the
              OBB Desktop Connection, as more fully described on Schedule B
              attached hereto and made a part hereof.

    2.10.     "DISTRIBUTION AGREEMENT" means that certain Distribution
              Agreement by and between Digital and BEA deemed to be executed as
              of January 31, 1997 substantially in the form of Exhibit II,
              attached hereto and made a part hereof.

    2.11.     "DMQ" means the product known as the DECmessageQ, as more fully
              described on Schedule B, attached hereto and made a part hereof.

    2.12.     "DOCUMENTATION" means all existing documentation for the
              Software, including without limitation any end user manuals,
              product specifications, diagrams, algorithms, other design
              documentation, training manuals, bug lists and any electronic
              machine-readable versions of the same, and a summary of Digital's
              current promotional activity with respect to the Software, any
              and all Software-related answer books or other records of
              customer service issues and/or responses, and any and all notes,
              plans and other documentation describing problems, proposed and
              implemented solutions, future directions, or other matters
              related to the Software.

    2.13.     "FIELD" means transaction monitors, message oriented middleware,
              object request brokers, object transaction monitors, and legacy
              connectivity products and middleware extensions thereof.

    2.14.     "HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
              of 1976, as amended.

    2.15.     "INCORPORATED AGREEMENTS" means the Agreements to be executed and
              delivered at the Closing, the forms of which are attached hereto
              as EXHIBIT I-V.

    2.16.     "INVENTORY" means all raw materials for, and all finished units
              of, the Software (excluding the Wrapper) in Digital's possession
              or control on the Closing Date.

    2.17.     "MIDDLEWARE ASSETS" means the following:

              2.17.1    A copy of the Source Code and a copy of the Object Code
                        (in all existing forms) for any and all existing
                        versions of the DMQ, OBB, Desktop products, and the
                        Wrapper product in development, for any operating
                        system, including any and all foreign language versions
                        of the same, whether now in existence or in the
                        development stage.


                                         -2-


<PAGE>

              2.17.2.   A copy of the current version of the Documentation and
                        the User List.

              2.17.3.   The Inventory, the Assumed Contracts, the Transferred
                        Computers, the Patents and the Trademarks.

              2.17.4.   All goodwill associated with the Middleware Assets
                        except such goodwill as is associated solely with the
                        Digital and DEC names, logos and prefixes.

    2.18.     "OBB" means the product known as the Digital ObjectBroker, as
              more fully described on Schedule B, attached hereto and made a
              part hereof.

    2.19.     "OBJECT CODE" means Code that loads and executes without further
              processing by a software compiler or linker, or that results when
              Source Code is processed by a software compiler.

    2.20.     "PATENTS" means all patents and applications for patents which
              are set forth on Schedule C, attached hereto and made a part
              hereof.  The term Patents includes all divisions, reissues,
              continuations, continuations-in-part, re-examinations, and
              extensions thereof and corresponding foreign patents and patent
              applications and all causes of action relating hereto.

    2.21.     "PROPRIETARY RIGHTS" means the Trademarks, the Patents, the
              Copyrights and all inventions, know-how, trade secrets,
              proprietary processes, formulae, customer lists, business
              information, and other intellectual and industrial property
              rights in and to the Software and the Documentation.

    2.22.     "REGISTRATIONS" has that meaning set forth in Section 12.9.2
              hereof.

    2.23.     "RETAINED ASSETS" shall mean the Wrapper Code, the Wrapper
              Documentation and cash and accounts receivable of Digital from
              the sale, licensing or other distribution of the Software which
              accrue prior to and including the Closing Date.

    2.24.     "SOFTWARE" means all Code for DMQ, OBB, Desktop, and Wrapper.

    2.25.     "SOURCE CODE" means Code in human-readable form and related
              system documentation, including all comments and procedural
              language.

    2.26.     "SUBSIDIARY" means a corporation, company or other entity (i)
              more than fifty percent (50%) of whose outstanding shares or
              securities (representing the right to vote for the election of
              directors or other managing authority) are, or (ii) which does
              not have outstanding shares or securities, as may be the case in
              partnership, joint venture, or unincorporated association, but
              more than fifty percent (50%) of whose ownership interest
              representing the right to make the decisions for such
              corporation, company or other entity is, now or hereafter, owned
              or controlled, directly or indirectly, by a party hereto, but
              such corporation, company or other entity shall be deemed to be a
              Subsidiary only so long as such ownership or control exists.  By


                                         -3-


<PAGE>

              way of example and not limitation, BEA International, which is
              currently wholly owned by BEA, is currently a Subsidiary of BEA.

    2.27.     "TRADEMARKS" means all trademarks and all registrations and
              applications for registration thereof which are set forth on
              Schedule C.

    2.28.     "TRANSFERRED COMPUTERS" all of the dedicated desktop computers
              and servers and other equipment which are used by or necessary to
              the duties of the Transferred Employees in connection with the
              Middleware Assets, as set forth on Schedule D, attached hereto
              and made a part hereof.

    2.29.     "TRANSFERRED EMPLOYEES" has that meaning set forth in Section 10
              hereof.

    2.30.     "USER LIST" means a copy of the current Digital Reporting Center
              list of Software licensees, which list is not intended to be an
              exhaustive list of such licensees.

    2.31.     "WRAPPER" means the product in development known as the R/3 BB
              Wrapper, as more fully described on Schedule B, attached hereto
              and made a part hereof.

3.  CLOSING, CONDITION TO CLOSING AND DELIVERIES

    3.1.      CLOSING.  The Closing shall be held on the Closing Date, at a
              mutually agreed upon time and place.

    3.2.      CONDITION TO CLOSING.  The obligations of Digital and BEA to
              consummate the transaction contemplated herein and to proceed
              with the Closing are subject to the satisfaction at or prior to
              the Closing, of the following condition, which may only be waived
              at or prior to the Closing in a written agreement executed by
              both parties:

              Any waiting periods applicable to the transactions contemplated
              by this Agreement under applicable United States and foreign
              antitrust or trade regulation laws and regulations, including,
              without limitation, under the HSR Act, shall have expired or been
              earlier terminated, and all governmental consents, authorizations
              or approvals required in connection with the transactions and
              their consummation contemplated by this Agreement shall have been
              obtained or given.  Without limiting the foregoing, each of
              Digital, BEA and any other person (as defined in the HSR Act and
              the rules and regulations thereunder) required in connection with
              the transactions contemplated hereby to file a Notification and
              Report Form for Certain Mergers with the Antitrust Division of
              the Federal Trade Commission ("FTC") pursuant to the HSR Act
              shall have made such filing and the applicable waiting periods
              with respect to such filing (including any extension thereof by
              reason of a request for additional information) shall have
              expired or have been terminated.


                                        4


<PAGE>

    3.3.      OBLIGATIONS OF DIGITAL PRIOR TO CLOSING

              3.3.1.    All corporate and other proceedings required to be
                        taken by Digital in connection with the transactions
                        contemplated hereby shall have been taken and shall be
                        reasonably satisfactory in form and substance to BEA.

              3.3.2.    Digital shall have delivered, or caused to be
                        delivered, to BEA, the following:

                             a)   a certificate of an appropriate officer of
                                  Digital authorizing the execution of this
                                  Agreement and the consummation of the
                                  transactions contemplated hereby;

                             b)   the Middleware Assets;

                             c)   a duly executed Distribution Agreement in
                                  substantially the form of EXHIBIT II attached
                                  hereto;

                             d)   a duly executed Consulting Agreement in
                                  substantially the form of EXHIBIT I attached
                                  hereto;

                             e)   a duly executed Bill of Sale in substantially
                                  the form of Exhibit III attached hereto;

                             f)   a duly executed Assignment of Trademarks and
                                  Patents substantially in the form of EXHIBIT
                                  IV hereto; and

                             g)   all other consents, instruments, schedules,
                                  documents and exhibits as Digital may be
                                  required by this Agreement to deliver to BEA
                                  at or before the Closing, or as are
                                  reasonably requested by BEA in connection
                                  with the transactions contemplated hereby.

              3.3.3.    Digital shall have performed its obligations under this
                        Agreement required to be performed by it at or prior to
                        the Closing pursuant to the terms hereof.

              3.3.4.    The representations and warranties of Digital contained
                        in this Agreement shall be true, complete and correct
                        in all material respects as of the Closing.

    3.4.      OBLIGATIONS OF BEA PRIOR TO CLOSING

              3.4.1.    All corporate and other proceedings required to be
                        taken by BEA in connection with the transactions
                        contemplated hereby shall have been


                                        5


<PAGE>

                        taken and shall be reasonably satisfactory in form and
                        substance to Digital.

              3.4.2.    BEA shall have delivered, or cause to be delivered, to
                        Digital the following:

                             a)   a certificate of an appropriate officer of
                                  BEA authorizing the execution of this
                                  Agreement and the consummation of the
                                  transactions contemplated hereby;

                             b)   a duly executed Promissory Note substantially
                                  in the form of EXHIBIT V hereto;

                             c)   a duly executed Distribution Agreement, in
                                  substantially the form of EXHIBIT II attached
                                  hereto;

                             d)   a duly executed consulting Agreement in
                                  substantially the form of EXHIBIT I attached
                                  hereto;

                             e)   all other documents as BEA may be required by
                                  this Agreement to deliver to Digital at or
                                  before the Closing, or as are reasonable
                                  requested by Digital in connection with the
                                  transactions contemplated hereby.

              3.4.3.    BEA shall have performed its obligations under this
                        Agreement required to be performed by it at or prior to
                        the Closing pursuant to the terms hereof.

              3.4.4.    The representations and warranties of BEA contained in
                        this Agreement shall be true, complete and correct in
                        all material respects as of the Closing.

    3.5.      EFFECTIVE CLOSING.  Irrespective of the actual Closing Date, the
              parties agree that, if the condition to Closing set forth in
              Section 3.2 occurs by the Closing Date, the effective Closing
              Date of this Agreement shall be deemed to be January 31, 1997 
              and all documents annexed to the Agreement shall be deemed to 
              be effective as of the effective Closing Date.

    3.6.      FINANCIAL STATEMENTS.  Digital will instruct its auditors to
              provide to BEA audited financial statements for the Software
              business unit, or its predecessor organizations, covering fiscal
              years 1995 and 1996 on or before February 28, 1997.  The fees
              charged by Digital's external auditors for the preparation of
              such statements by Digital's external auditors shall be borne by
              BEA.


                                         -6-

<PAGE>

4.  LICENSE, SALE AND PURCHASE OF ASSETS

    4.1.      PATENT ASSIGNMENT.

              4.1.1.    On the Closing Date, Digital hereby assigns, sells and
                        transfers to BEA its entire right, title and interest
                        in and to the Patents, subject to any and all Digital
                        licenses in existence as of the Execution Date;
                        provided that the foregoing assignment, sale and
                        transfer shall be void ab initio if the Closing does
                        not occur prior to or on April 30, 1997.

              4.1.2.    BEA shall, in its discretion, prosecute and maintain
                        the Patents and bear all costs arising therefrom on and
                        after the Closing Date.  If BEA decides not to
                        prosecute and maintain any of the Patents, Digital
                        shall have the right, but no obligation, to prosecute
                        and maintain said Patents and bear all costs arising
                        therefrom.

              4.1.3.    Digital shall prepare and sign such documents as
                        required for the assignment of the Patents and BEA
                        shall bear any and all costs for the assignment of the
                        Patents, including, without limitation, assignment
                        recordation fees, legal costs, and taxes.

    4.2.      PATENT LICENSE.  BEA grants to Digital, effective as of the
              Closing Date, a fully paid-up, unrestricted, non-exclusive,
              assignable, irrevocable, world-wide license under the Patents, to
              make, have made, manufacture, use, lease and sell or otherwise
              dispose of all products, components, parts and other material,
              covered by any claims of the Patents to the extent the Patents
              cover products or methods in the Field.  Furthermore, BEA grants
              to Digital, effective as of the Closing Date, a fully
              paid-up, unrestricted, exclusive, assignable, irrevocable,
              world-wide license under the Patents, to make, have made,
              manufacture, use, lease and sell or otherwise dispose of all
              products, components, parts and other material, covered by any
              claims of the Patents to the extent the Patents cover products or
              methods outside the Field.  The licenses granted in this Section
              4.2 include the right to grant sub-licenses of the Patents, in
              connection with the sale by Digital of any one or more lines of
              business or business units.  At BEA's request, Digital shall
              negotiate in good faith with BEA a sublicense under the foregoing
              exclusive license.

    4.3.      COPYRIGHT LICENSE.  Subject to any and all existing licenses as
              of the Closing Date, Digital hereby grants to BEA a perpetual
              (unless terminated pursuant to Section 9.2 below), worldwide,
              fully paid-up exclusive license in the case of Code and
              Documentation (other than Wrapper Code and Wrapper
              Documentation), and non-exclusive license in the case of Wrapper
              Code and Documentation, to use (including the right to reproduce,
              distribute copies of, modify and create derivative works), the
              Code and the Documentation, with the unrestricted right to grant
              sub-licenses.

The foregoing license will be subject to the following rights of third parties
and retained rights of Digital:


                                         -7-


<PAGE>

                     (i)     The rights (as they exist as of the Closing Date)
                             of licensed end-users, resellers and other third
                             party licensees of the Software and Documentation
                             to continue to exercise their rights with respect
                             to the Software and Documentation;

                    (ii)     Digital's retained right to use the Software and
                             Documentation, including all prior versions
                             thereof, for internal business purposes; and

                    (iii)    Digital's retained rights in and to existing and
                             future Digital products which incorporate portions
                             of the Software and Documentation (including
                             without limitation the right to market, promote,
                             license, grant sublicenses, transfer, modify,
                             reproduce, enhance and support such Digital
                             products).

    4.4.      OTHER PROPRIETARY RIGHTS.  Subject to any and all existing
              licenses as of the Closing Date, Digital hereby grants to BEA a
              fully paid up, perpetual (unless terminated pursuant to Section
              9.2 below) worldwide, non-exclusive license to use the
              Proprietary Rights other than the Patents, Trademarks and
              Copyrights with the unrestricted right to grant sublicenses;
              provided the foregoing license grant shall be void ab initio if
              the Closing does not occur prior to or on April 30, 1997.

    4.5.      TRANSFERABILITY.  The foregoing licenses may not be assigned to
              anyone other than a BEA Subsidiary or a purchaser of all or
              substantially all of BEA's assets relating to the Software.

    4.6.      NO IMPLIED LICENSE.  No license is granted, and no act or acts of
              manufacture, use or sale hereunder, shall be construed as, or
              result in, conveying any license, expressly or by implication,
              estoppel, or otherwise, under or with respect to any patent,
              trademark, copyright or other proprietary right other than as set
              forth under this Section 4.

    4.7.      TRANSFER OF MIDDLEWARE ASSETS.  Digital hereby sells, grants,
              transfers, conveys, assigns and delivers to BEA all right, title
              and interest in and to the Middleware Assets and as evidence
              thereof shall execute and deliver to BEA the Bill of Sale in
              substantially the form of Exhibit III and the Assignment of
              Trademarks and Patents in substantially the Form of Exhibit IV;
              provided that the foregoing sale, grant, transfer, conveyance,
              assignment and delivery shall be void ab initio if the Closing
              does not occur prior to April 30, 1997.  The parties acknowledge
              that the Retained Assets are not transferred as part of this
              Agreement, subject to the licenses granted in the Wrapper Code
              and Documentation.

    4.8.      TRANSFER OF COPYRIGHTS.  Effective upon the satisfaction by BEA
              of its obligations pursuant to Section 9.1 hereof, Digital hereby
              agrees to sell, grant, transfer, convey, assign and deliver to
              BEA all right, title and interest in the Copyrights, excluding
              Copyrights to Code and Documentation associated with the Wrapper,
              free and clear of any liens, pledges, security interests, claims
              or encumbrances of any


                                         -8-


<PAGE>

              kind.  Within ten (10) days of the satisfaction by BEA of the
              conditions to such transfer, Digital shall provide to BEA an
              executed assignment of copyrights in mutually agreeable form.

              The foregoing assignment will be subject to the following rights
              of third parties and retained rights of Digital:

                     (i)     The rights (as they exist as of the Closing Date)
                             of licensed end-users, resellers and other third
                             party licensees of the Software and Documentation
                             to continue to exercise their rights with respect
                             to the Software and Documentation;

                    (ii)     Digital's retained right to use the Software and
                             Documentation, including all prior versions
                             thereof, for internal business purposes; and

                   (iii)     Digital's retained rights in and to existing and
                             future Digital products which incorporate portions
                             of the Software and Documentation (including
                             without limitation the right to market, promote,
                             license, grant sublicenses, transfer, modify,
                             reproduce, enhance and support such Digital
                             products).

    4.9.      ASSUMPTION OF ASSUMED CONTRACTS.  Effective upon Closing, Digital
              hereby assigns to BEA all of Digital's rights and obligations
              under the Assumed Contracts, and BEA hereby accepts such
              assignment and assumes all responsibilities and obligations of
              the Assumed Contracts as part of the consideration for this
              Agreement.

    4.10.     LIMITATION ON ASSUMPTION.  BEA shall not assume, pay or discharge
              or in any respect be liable for any liability, obligation,
              commitment or expense of Seller with respect to the Assumed
              Contracts other than those which accrue after the Closing
              Date.

    4.11.     BEA shall have no obligation under this Agreement or any
              Incorporated Agreement to include any notice of Digital's
              ownership of any of the Middleware Assets or other Proprietary
              Rights.

    4.12.     NO COMPETING PRODUCTS.  Digital agrees that following the
              Closing, it will not create or have created or exercise any of
              the license rights granted to Digital, or any rights retained by
              Digital under this Agreement, or combine products currently
              existing at Digital, to create or have created any product which
              functionally is substantially similar to DMQ, OBB or Desktop.
              Digital's obligation under this Section 4.12 shall terminate in
              the event of a default by BEA in its payment obligations under
              the Note referenced in Section 9.1.1, or in its obligation to pay
              Digital $5 million in BEA stock or cash pursuant to Sections
              9.1.2 and 9.3, or in the event BEA no longer makes the Former
              Digital Products (as defined in the Distribution Agreement) or
              products which are functionally substantially similar to DMQ, OBB
              or Desktop available to Digital as a reseller.


                                         -9-

<PAGE>

    4.13      TRANSITION. Notwithstanding anything to the contrary contained
              herein, the parties agree that for a period of one year from the
              Closing, Digital may continue distribution of DMQ under the
              DECmessageQ name and that BEA will not file an application for
              registration of a mark containing messageQ until the expiration
              of that period. Notwithstanding the foregoing, BEA may use the
              phrase "MessageQ" or any variation thereof in its business, and
              Digital will reasonably cooperate with BEA to the extent
              necessary to prevent any confusion in the marketplace during this
              transition period. At the end of the transition period, Digital
              shall abandon its use and registration of DECmessageQ and shall
              reasonably cooperate with BEA in the event that BEA applies for
              any trademark registrations for "MessageQ" or any variant thereof
              which does not include the Digital or DEC name. During the
              transition period, Digital shall inform BEA of any actual
              infringements of the DECmessageQ trademark which are known to
              Digital.

5.  ADDITIONAL OBLIGATIONS AND COVENANTS

    5.1.      CONSENTS

              5.1.1.    Digital will use commercially reasonable efforts to
                        obtain any consent, approval, or amendment required to
                        assign all Assumed Contracts and complete all other
                        transfers and transactions contemplated by this
                        Agreement at Digital's sole expense.

              5.1.2.    In the event and to the extent that Digital is unable
                        to obtain any such required consent, approval, or
                        amendment, or if any attempted assignment or novation
                        would be ineffective or would adversely affect the
                        rights of Digital with respect to any of the Middleware
                        Assets so that BEA would not in fact receive all of the
                        rights due to it with respect to such asset, Digital
                        will cooperate with BEA, to the extent permitted by
                        law, in a mutually agreeable arrangement under which
                        BEA would, to the fullest extent possible, obtain the
                        benefits and assume the obligations with respect to
                        such asset, in accordance with this Agreement.

    5.2.      COPYRIGHTS. Digital hereby covenants and agrees that during the
              term of any license granted pursuant to Section 4 hereof, (i)
              Digital shall hold the Copyrights, other than the Copyrights in
              Wrapper Code and Documentation free and clear of any liens,
              pledges, security interests, claims or encumbrances of any kind,
              (ii) Digital shall not transfer to any third party any interest
              in and to any property to be transferred to BEA pursuant to the
              terms of this Agreement, and (iii) Digital shall take no action
              to interfere with BEA's full enjoyment of any license granted
              herein or the transfer of title contemplated hereby.

    5.3.      HSR FILING. Unless Digital's legal counsel and BEA's legal
              counsel agree that an exemption applies to this transaction,
              Digital and BEA shall each exercise all reasonable efforts to
              file promptly complete notification and report forms (FTC Form
              C4) (the "Reports") under the HSR Act, with the Pre-merger
              Notification


                                         -10-

<PAGE>
              Office, FTC and the Director of Operations, Antitrust Division,
              Department of Justice and failure to do so shall constitute a
              default hereunder. Each party shall pay its own fees in
              connection with such filings, and each party shall pay all costs
              and expenses in connection with the preparation and filing of the
              Reports. Both parties shall request an early termination of the
              statutory filing period required to elapse after the filing of
              the Reports (the "Waiting Period"). In the event any governmental
              agency with requisite power and authority issues an objection to
              the consummation of the purchase of the Middleware Assets by BEA,
              or issues a request for supplemental information with respect to
              the filing under the HSR Act, BEA and Digital shall use all
              reasonable efforts to remove the cause for such objection or
              respond to such request and do such other acts as are necessary
              to obtain termination or expiration of the Waiting Period and to
              comply with the Act.

    5.4.      PAYMENT ALLOCATION. To assure a smooth transition during the
              first twelve (12) months following the Closing Date, the parties
              agree to cooperate in good faith to determine the appropriate
              allocation for the distribution of any payments received for the
              sale or license to third parties of the Software.

    5.5.      TECHNICAL SUPPORT. Digital will use commercially reasonable
              efforts to implement a smooth transition of operations from
              Digital to the end that all Software distributors and customers
              will experience as little disruption and delay in service, supply
              and support as is reasonably practicable. In addition, BEA and
              Digital will develop a joint support plan (including transition
              arrangements) for the Software.

    5.6.      SOFTWARE MAINTENANCE AND SUPPORT AGREEMENT. Following the
              execution date, the parties shall negotiate in good faith a
              mutually acceptable Software Maintenance and Support Agreement
              pursuant to which Digital will be permitted to provide
              maintenance and support services to customers of the Former
              Digital Products (as defined in the Distribution Agreement) and
              BEA will provide second and third tier support.

    5.7.      FURTHER ASSURANCES. Digital agrees that, at any time after the
              Closing Date, upon the request of BEA, it will do, execute,
              acknowledge and deliver, all such further acknowledgments, deeds,
              assignments, bills of sale, transfers, conveyances, instruments,
              consents and assurances as may reasonably be required for the
              better assigning, transferring, granting, conveying, assuring and
              confirming to BEA, its successors and assigns, the transfers
              contemplated by this Agreement.

    5.8.      CONDUCT OF BUSINESS OF DIGITAL PENDING THE CLOSING. Digital
              agrees that, during the period from the Execution Date to the
              Closing:

              5.8.1.    Digital shall cause the business operations related to
                        the Middleware Assets and Transferred Employees to be
                        conducted in the ordinary course consistent with past
                        practice and use commercially reasonable efforts to
                        preserve intact the relevant organization in all
                        material respects, provided, however, that Digital
                        shall not enter into any source code license,
                        technology-sharing, joint development, co-marketing or
                        similar arrangements with any third party, and/or issue
                        any press


                                         -11-

<PAGE>

                        releases or make any public announcements (except as
                        otherwise provided herein) with respect to the
                        Middleware Assets; and

              5.8.2.    Digital shall not sell or dispose of any of the
                        properties or assets to be transferred pursuant to this
                        Agreement, except in the ordinary course of business
                        consistent with past practices.

              5.8.3.    Except as otherwise contemplated by this Agreement,
                        Digital will not (i) take or agree or commit to take
                        any action that would make any representation and
                        warranty of Digital hereunder inaccurate in any
                        material respect at, or as of any time prior to, the
                        Closing Date, or (ii) omit or agree or commit to omit
                        to take any action necessary to prevent any such
                        representation or warranty from being inaccurate in any
                        material respect at any such time.

6.  SOURCE CODE ESCROW

    6.1.      As soon as practicable, but in no event later than thirty (30)
              days following the Closing Date, BEA shall establish an escrow
              account with Fort Knox Escrow Services, Inc. (or other comparable
              third party provider of software services approved by Digital in
              writing, such approval not to be unreasonably withheld or
              delayed) for the Source Code and the compiled version thereof.
              Within four (4) business days thereafter, Digital shall deliver
              to the escrow agent a complete copy of the Source Code of the
              Software as such Software exists on the Closing Date, together
              with a compiled version of Source Code.  At the request of BEA,
              Digital shall execute certification of the accuracy of the
              initial deposit, and no party shall alter the deposit following
              the date of such certification.

    6.2.      The foregoing escrow account shall be maintained by BEA for no
              less than three (3) years after the Closing Date.  In the
              Agreement with the escrow agent, BEA shall provide that a copy of
              such Source Code and compiled version is to be released to each
              of Digital and BEA in the event any dispute regarding any part of
              the Software arises in connection with the parties' obligations
              under Section 14 hereof for the sole purpose of providing
              evidence in connection with any such dispute.  Digital agrees to
              such limited use of the released copies of the Software and
              further agrees not to make any additional copies of such
              Software.  Upon resolution of any dispute in connection with
              Section 14 hereof pursuant to which a copy of the code was
              released to Digital, Digital immediately shall return (or
              destroy, with the advance written approval of BEA) all copies of
              the release code to BEA and certify, in writing, to BEA that
              Digital has complied with its obligations under this sentence.

7.  OWNERSHIP OF INTELLECTUAL PROPERTY AND PROTECTION OF RIGHTS

    7.1.      OWNERSHIP OF SOFTWARE AND DOCUMENTATION.  Subject to the
              exclusive license granted herein to BEA, Digital shall retain
              ownership of the Copyrights in the Software and Documentation
              until such time as BEA has fulfilled its obligations under
              Section 9 of this Agreement, at which time Digital shall transfer
              and assign to BEA the Copyrights in the Code and the
              Documentation, other than the Wrapper

                                         -12-


<PAGE>

              Code and the Wrapper Documentation, as provided in Section 4.8
              herein. Subject to Section 9.2 hereof, BEA shall own all right,
              title and interest in and to any proprietary rights in any
              enhancements, derivative versions or other modifications of such
              Software and Documentation made by BEA prior to such transfer and
              thereafter, and in any other BEA products or services based on or
              derived from the Software and Documentation.

    7.2.      ENFORCEMENT

              7.2.1.    BEA, as exclusive licensee, shall have the right in the
                        first instance to pursue any infringers of the
                        Copyrights in the Software and Documentation other than
                        the Wrappper Software and the Wrapper Documentation.
                        While such license is in effect, Digital shall notify
                        BEA promptly of any known or suspected infringements of
                        such Software or Documentation and shall reasonably
                        cooperate at BEA's expense in any enforcement actions
                        commenced by BEA (including without limitation becoming
                        a co-plaintiff with BEA if required by law or requested
                        by BEA).  BEA shall be entitled to enter into
                        settlements of infringement suits brought by it under
                        this section subject to the approval of Digital (not to
                        be unreasonably withheld) and to keep any damages and
                        costs awards or settlement proceeds obtained by BEA
                        except where both Digital and BEA have assumed expenses
                        associated with the action and the parties have agreed
                        in writing to an allocation of damage awards and costs.
                        Where BEA elects not to pursue infringers under this
                        Section, it shall promptly so inform Digital in
                        writing.  Digital thereafter shall have the right to
                        pursue such infringers at its own expense and otherwise
                        to exercise the right to settle infringement suits
                        subject to the approval of BEA (not to be unreasonably
                        withheld) and to keep any damages and costs awards or
                        settlement proceeds obtained by Digital.

              7.2.2.    BEA shall reasonably cooperate with Digital in any 
                        actions initiated by Digital to pursue infringers of 
                        any, Software or Documentation, other than the Wrapper 
                        Software and the Wrapper Documentation if requested by 
                        Digital and at Digital's expense.

              7.2.3.    Digital, as exclusive licensee, shall have the right in
                        the first instance to pursue any infringers of claims
                        of the Patents outside the Field.  While such exclusive
                        license is in effect, BEA shall notify Digital promptly
                        of any known or suspected infringements of such Patents
                        and shall reasonably cooperate at Digital's expense in
                        any enforcement actions commenced by Digital (including
                        without limitation becoming a co-plaintiff with BEA if
                        required by law or requested by Digital). Digital shall
                        be entitled to enter into settlements of infringement
                        suits brought by it under this section subject to the
                        approval of BEA (not to be unreasonably withheld) and
                        to keep any damages and costs awards or settlement
                        proceeds obtained by Digital except where both Digital
                        and BEA have assumed expenses associated with the
                        action and the parties


                                         -13-

<PAGE>

                        have agreed in writing to an allocation of damage
                        awards and costs.  Where Digital elects not to pursue
                        infringers under this Section, it shall promptly so
                        inform BEA in writing.  BEA thereafter shall have the
                        right to pursue such infringers at its own expense and
                        otherwise to exercise the right to settle infringement
                        suits subject to the approval of Digital (not be
                        unreasonably withheld) and to keep any damages and
                        costs awards or settlement proceeds obtained by the
                        BEA.

              7.2.4     Digital shall reasonably cooperate with BEA in any
                        actions initiated by BEA to pursue infringers of the
                        Patent if requested by BEA and at BEA's expense.

8.  CONFIDENTIALITY

    8.1.      In the course of the performance of this Agreement, Digital and
              BEA each recognizes that it will obtain, or has prior to the
              Execution Date obtained, access to the confidential, propriety,
              technical, business and operational information of the other,
              including without limitation the Proprietary Rights (excluding
              the issued Patents)(the "Confidential Information").  The terms
              of this Agreement and all Incorporated Agreements constitute
              Confidential Information.

    8.2.      Information shall not constitute Confidential Information if:

              8.2.1     it is demonstrated to the satisfaction of both parties
                        to have been in the possession of the receiving party
                        or available to the receiving party prior to the
                        disclosure, without any breach of a duty of
                        confidentiality owed by any party to the disclosing
                        party;

              8.2.2.    the receiving party rightfully obtains the Confidential
                        Information without breach of this Agreement, or any
                        laws or regulations of the United States of America
                        from a third party having no duty of confidentiality to
                        the disclosing party;

              8.2.3.    it is demonstrated to the satisfaction of both parties
                        to have been independently developed by the receiving
                        party without use of the Confidential Information; or

              8.2.4.    the disclosing party authorizes in writing the
                        disclosure of the Confidential Information.

    8.3.      All information disclosed by Digital which becomes or is intended
              to become the property of BEA by virtue of the transactions
              contemplated herein constitutes Confidential Information of BEA,
              as if BEA were the disclosing party therefor.

    8.4.      The receiving party shall use the same care and discretion, but
              no less than reasonable care and discretion, to avoid disclosure,
              publication, or dissemination of Confidential Information it has
              received, as the receiving party employs for similar information
              of its own which it does not desire to publish, disclose or
              disseminate,
                                         -14-


<PAGE>

              except to those employees and/or permitted subcontractors of the
              receiving party who have a need to know in order to exercise the
              rights granted or retained pursuant to this Agreement and who
              have agreed to be bound by the confidentiality terms of the
              Agreement.

    8.5.      Notwithstanding any other provision of this Section 8, if the
              receiving party is required to disclose any Confidential
              Information pursuant to legal, accounting or regulatory
              requirements, the receiving party shall provide to the disclosing
              party notice of such required disclosure in writing, sufficiently
              in advance thereof to enable the disclosing party to take
              reasonable actions to avoid the requirement of disclosure.  The
              receiving party shall cooperate with all reasonable requests of
              the party to take reasonable actions to avoid the requirement 
              of disclosure. The receiving party shall cooperate with all 
              reasonable requests of the disclosing party in connection 
              therewith.  Digital hereby agrees that any disclosure of the 
              terms of this Agreement and the subject matter thereof that BEA 
              reasonably determines is necessary with in connection with an 
              initial public offering or any subsequent filing with the 
              Securities and Exchange Commission is permitted without further 
              approval from Digital.

9.  CONSIDERATION

    9.1.      TRANSFER OF MIDDLEWARE ASSETS.  In consideration for the purchase
              by BEA of the Middleware Assets pursuant to Section 4 hereof, BEA
              shall make payments to Digital as follows:

              9.1.1.    At the Closing, BEA shall execute and deliver to
                        Digital a promissory note in the original principal
                        amount of $17 million in the form attached hereto as
                        Exhibit V (the "Note").  Digital agrees that (a) it
                        will not assign the Note to any entity other than a
                        bank or other financial institution without first 
                        obtaining BEA's consent to such assignment and (b) 
                        before it assigns the Note to any third party, it shall
                        have given BEA thirty (30) days prior written notice of
                        such intended assignment and the opportunity to purchase
                        the Note from Digital on terms no less favorable to BEA
                        than the terms offered to such third party.

              9.1.2.    Subject to Section 9.3 below, BEA shall pay to Digital
                        the sum of $5,000,000 on the earlier of June 20, 1997
                        or the date which is 30 days after the consummation of
                        the initial sale by BEA pursuant to a firm commitment
                        underwriting to the public of BEA Common Stock, $.001
                        par value per share ("Common Stock") as registered under
                        the Securities Act of 1933, as amended (the "Act")
                        (which sale is hereinafter referred to as the "Initial
                        Public Offering").

                                         -15-


<PAGE>

               9.1.3.    BEA agrees that until it has fully satisfied its
                         payment obligations to Digital under the Note
                         referenced in Section 9.1.1 above or in its obligation
                         to pay Digital $5 million in BEA stock or in cash
                         pursuant to Section 9.1.2 hereof, it shall not sell or
                         assign any of the Middleware Assets to any entity other
                         than a Subsidiary of BEA or the purchaser of
                         substantially all the assets of BEA.  The sale of a
                         fifty percent (50%) or greater interest in such a
                         Subsidiary of BEA shall constitute a prohibited sale
                         hereunder.

     9.2.      DEFAULT.  In the event that BEA defaults in its payment
               obligations under the Note referenced in Section 9.1.1 above or
               Section 9.3 below or in its obligation to pay Digital $5 million
               in BEA stock or in cash pursuant to Section 9.1.2 above, then the
               licenses granted by Digital to BEA pursuant to Sections 4.1 and
               4.2 hereof shall terminate upon notice thereof by Digital to BEA.
               Following such termination, BEA shall promptly (i) cease all use
               of the Software and Documentation and the Proprietary Rights;
               (ii) convey back to Digital the Middleware Assets; (iii) transfer
               to Digital any Software and Documentation inventory in its
               possession or under its control; (iv) assign to Digital any
               modifications that BEA may have made to, or derivative works that
               BEA may have made of the Software and Documentation; (v) deliver
               to Digital any other physical embodiments of the Software and
               Documentation in its possession or under its control; and (vi)
               certify in writing to Digital its compliance with the foregoing.
               All of the foregoing shall be done at BEA's sole expense.

     9.3       In the event that BEA shall determine to proceed with an Initial
               Public Offering, BEA shall give notice to Digital of such
               determination not later than five (5) days following the initial
               filing by BEA of a registration statement under the Act (the
               "Registration Statement") with the Securities and Exchange
               Commission ("SEC") as to the Initial Public Offering.  Digital
               shall thereafter have 28 days from the date of such notice to
               elect to purchase up to $5 million shares of Common Stock in the
               Initial Public Offering at the same offering price per share as
               BEA shall be Offering its Common Stock to other investors in the
               Initial Public Offering.  Digital's right to participate in the
               Initial Public Offering shall be subject to the offering and sale
               by underwriters of the shares of Common Stock to be issued to
               Digital pursuant to this Section 9.3, and any obligation of
               Digital pursuant to this Section 9.3 to purchase shares of Common
               Stock and of BEA to issue and sell such common stock shall be
               subject to the Registration Statement being declared effective
               and remaining effective at the time of such issue and sale.  In
               the event the Registration Statement shall not be declared
               effective within 90 days of Digital's original election, Digital
               shall have the right to rescind such election by a second notice
               to BEA.  To the extent that Digital shall purchase shares of
               Common Stock pursuant to this Section 9.3, BEA agrees to
               accelerate its payment obligations pursuant to Section 9.1.2 
               above and prepay such obligation within ten (10) days of 
               such purchase in an amount equal to the gross proceeds paid by 
               Digital for Common Stock in the Initial Public Offering.  
               Digital's rights under this Section 9.3 (other than its right 
               to receive the payment provided for in the immediately preceding 
               sentence) shall terminate immediately after the closing of the 
               Initial Public Offering or the payment


                                         -16-
<PAGE>

               in full of those amounts owing to Digital pursuant to 9.1.2
               above, whichever occurs first.

10.  EMPLOYEES; LEASE OF SPACE

     10.1      OFFER OF EMPLOYMENT.  BEA agrees to offer employment to all those
               Digital employees who are closely associated with the development
               of the Software and Documentation and who are identified on
               Schedule E of this Agreement.  Those employees identified on
               Schedule E will receive written offers of employment with BEA to
               be delivered by BEA prior to the Closing Date, such offers being
               contingent upon the Closing.  Digital employees who receive
               offers of employment from BEA will not be required to take drug
               tests or physical examinations as a condition of employment.  All
               offers shall be subject to acceptance or rejection prior to
               Closing.  Those employees who have accepted contingent offers
               from BEA prior to the Closing Date shall be referred to herein as
               "Transferred Employees."  Upon Closing, each of the Transferred
               Employees will cease their employment with Digital and shall
               become employees of BEA.

     10.2      COMPENSATION/BENEFITS PACKAGE.

               10.2.1.   Subject to the terms of this Section 10.2, BEA shall
                         offer the Transferred Employees compensation and
                         benefits packages that are comparable to those they
                         received at Digital.  BEA shall offer to each
                         Transferred Employee a base salary that is minimally
                         consistent with that earned by such employee at Digital
                         on the Closing Date for a position with BEA which is
                         the same or substantially equivalent to the employee's
                         position at Digital.  BEA shall not reduce such base
                         salary for a period of six (6) months from the Closing
                         Date.

               10.2.2.   Prior to the Execution Date, BEA has provided to
                         Digital confidential information regarding the proposed
                         compensation packages for each Transferred Employee for
                         the purpose of enabling Digital to evaluate
                         independently whether BEA's proposed benefits package
                         is "comparable" to that received by each such employee
                         at Digital and Digital hereby confirms that BEA's
                         proposed compensation packages as disclosed to Digital
                         comply with BEA's obligations hereunder with respect
                         thereto.  To the extent permitted by law or contract,
                         BEA's benefits plans and programs offered to the
                         Transferred Employees shall reflect credit for service
                         with Digital.  However, nothing in this Agreement shall
                         be construed to require BEA to offer benefits, plans
                         and programs to the Transferred Employees which are
                         different from the benefits plans and programs which
                         are offered to BEA's other employees.  No pre-existing
                         limitations, waiting periods, or proof of insurability
                         will be imposed by BEA or its benefits plans with
                         respect to initial benefits eligibility of the
                         Transferred Employees.  To the extent legally
                         permitted, BEA will effect a plan-to-plan transfer of
                         the Transferred Employees' savings accounts from
                         Digital's SAVE 401(k) plan to BEA's 401(k) plan,
                         provided that Digital shall cooperate with all
                         reasonable requests by BEA in connection with effecting
                         such


                                         -17-
<PAGE>

                        transfers.  Digital and BEA shall reasonably cooperate
                        in effecting the transfers of any elections and account
                        balances of the Transferred Employees in connection
                        with employee reimbursement plans (e.g., health and
                        dependent care).  Digital acknowledges and agrees that
                        nothing in this Section 10 shall require BEA to
                        undertake any modification of BEA's existing
                        compensation and benefits practices or to take any
                        action that would tend, in BEA's sole judgment, to
                        expose BEA to liability under any law, regulation,
                        court order, ordinance or contract of any kind.

              10.2.3.   At or before Closing, Digital shall pay out to all
                        Transferred Employees all vacation accrual liability
                        owed by Digital to the Transferred Employees for the 
                        period through the Closing. BEA shall provide each 
                        Transferred Employee who requests vacation time during 
                        the first 12 months after closing with two (2) weeks 
                        unpaid vacation, subject to BEA's policies and 
                        procedures regarding its employees' exercise of 
                        vacation time.

    10.3.     TRANSFERRED EMPLOYEES' LOCATION/OFFICE SPACE.  BEA shall use
              commercially reasonable efforts to provide office space for the
              Transferred Employees which is located within 20 miles of their
              present employment locations as indicated on Schedule E.  BEA may
              request that Digital sublet to BEA all or some of the present
              office facilities occupied by the Transferred Employees for the
              first six months following the Closing Date.  If BEA makes such a
              request, Digital shall sublet the requested office space to BEA
              at the same rates currently paid by Digital for such office space
              if Digital leases the space from an entity which is not
              affiliated with Digital, and at the prevailing commercial rate
              for comparable space if Digital leases the space from an entity
              which is affiliated with Digital.  Digital represents that as of
              the Closing Date its existing leases and arrangements for the
              office space presently occupied by the Transferred Employees do
              not prohibit the continued use of such space by the Transferred
              Employees, as presently being used, for a period of six months
              following the Closing Date.

    10.4.     TRANSFERRED COMPUTERS.  At Closing, Digital shall sell and
              transfer to BEA the Transferred Computers.  Digital shall at the
              same time transfer to BEA all purchase orders, warranties,
              trouble records, service records, and any other documentation
              evidencing ownership or title or relating to the use and 
              performance of the Transferred Computers.

    10.5.     SHARED EQUIPMENT AND FACILITIES.  If Digital sublets or otherwise
              provides office space to any Transferred Employees pursuant to
              Section 10.3 of this Agreement, such Transferred Employees shall
              have full access to the computing resources (E.G., hardware,
              software, network privileges, and communications) which were used
              by such employees while employed by Digital in connection with
              their duties involving the Middleware Assets.  Such access to
              computing resources shall be provided without further charge to
              BEA.  The parties agree to cooperate promptly to resolve any
              security or confidentiality concerns which may arise as a result
              of the sharing of computing resources contemplated in this
              Section 10.5, provided that any such


                                         -18-

<PAGE>

              solutions shall be designed to ensure that the Transferred
              Employees shall be able to perform their jobs effectively,
              efficiently, and without undue delay.

    10.6.     TERMINATION OF TRANSFERRED EMPLOYEES.  BEA shall not relocate or
              terminate any Transferred Employee, except for cause, for a
              period of six months from the Closing Date.  If BEA should
              terminate any Transferred Employee for reasons other than for
              cause within the first 18 months following the Closing Date, BEA
              shall offer to such terminated Transferred Employee severance
              benefits which are comparable to the severance benefits the
              terminated employee would have received from Digital under
              similar circumstances.

    10.7.     NON-SOLICITATION.  BEA shall not hire or attempt to hire any
              Digital employees who work on the Middleware Assets in the United
              States prior to the Closing Date without the written consent of
              Digital.  Digital agrees not to re-hire or directly or indirectly
              attempt to re-hire, for a period of 12 months from the Closing
              Date, any of the Terminated Employees.

    10.8.     INDEMNITIES CONCERNING TRANSFERRED EMPLOYEES.

              10.8.1.   Digital agrees to indemnify, defend, and hold harmless
                        BEA, its officers, directors, employees, agents,
                        successors and assigns, in accordance with the
                        procedures set forth in Section 14 hereof, from and
                        against any and all Claims (as defined in Section 14.1
                        hereof) by any Transferred Employee arising from or
                        related to such Transferred Employee's employment with
                        Digital or to acts or omissions of Digital or its
                        subcontractors which are in violation of law and which
                        occurred or accrued prior to and including the Closing
                        Date.

              10.8.2.   BEA agrees to indemnify, defend, and hold harmless
                        Digital, its officers, directors, employees, agents,
                        successors and assigns, in accordance with the
                        procedures set forth in Section 14 hereof, from and
                        against any and all Claims by any Transferred Employee
                        arising from or related to such Transferred Employee's
                        employment with BEA or to acts or omissions of BEA or
                        its subcontractors which are in violation of law and
                        which occur or accrue after the Closing Date.

11. SALES AND TRANSFER TAXES

    11.1.     Digital shall prepare and file any required tax returns in
              connection with all sales, use or similar taxes incurred as a
              result of this transaction and BEA shall promptly deliver to
              Digital the amount of such taxes required to be remitted with
              such tax returns.

12. REPRESENTATIONS AND WARRANTIES OF DIGITAL

    12.1.     ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS.  Digital is a
              corporation duly organized and existing under, and by virtue of,
              the laws of the Commonwealth of Massachusetts and is in good
              standing under such laws.


                                         -19-

<PAGE>

    12.2.     CORPORATE POWER. Digital has all requisite corporate power to
              execute and deliver this Agreement and all agreements to be
              executed and delivered by Digital pursuant to the terms hereof
              and to carry out and perform its obligations under the terms of
              this Agreement and such other agreements.

    12.3.     AUTHORIZATION. All corporate action on the part of Digital, its
              directors and its stockholders necessary for the authorization,
              execution, delivery and performance of this Agreement and any
              other agreements contemplated hereby has been taken. This
              Agreement and any other agreements contemplated hereby, when
              executed and delivered by Digital, will constitute valid and
              binding obligations of Digital, enforceable in accordance with
              their respective terms.

    12.4.     COMPLIANCE WITH OTHER INSTRUMENTS, NO CONFLICTS, ETC. The
              execution, delivery and performance of and compliance with this
              Agreement and the Incorporated Agreements to be executed by
              Digital in connection herewith will not result in any violation
              of, or conflict with, or constitute a default under Digital's
              Articles of Organization or Bylaws, or under any agreement to
              which Digital is a party, or result in the creation of, any
              mortgage, pledge, lien, encumbrance or charge upon any of the
              properties or assets of Digital. No consent of any person not a
              party to this Agreement and no consent of any governmental
              authority is required to be obtained on the part of Digital to
              permit the consummation of the transactions contemplated by this
              Agreement, except those consents expressly identified in this
              Agreement. Digital is not in violation of any term of its
              Articles of Organization or Bylaws, or in any material respect of
              any term or provision of any mortgage, indebtedness, indenture,
              contract, agreement, instrument, judgment or decree, order,
              statute, rule or regulation applicable to Digital if it could
              have an adverse impact on the transactions contemplated by this
              Agreement.

    12.5.     LITIGATION, ETC. There are no actions, suits, proceedings,
              oppositions, interferences, cancellation proceedings, challenges,
              investigations, or other legal or governmental proceedings
              pending against Digital or its officers or properties before any
              court, arbitrator or governmental agency (or, to the best of
              Digital's knowledge, is there any threat thereof), and Digital is
              not a party to or subject to the provisions of any order, writ,
              injunction, judgment, or decree or any court or government agency
              (or, to the best of Digital's knowledge, is there any threat
              thereof), and Digital is not a party to or subject to the
              provisions of any order, writ, injunction, judgment, or decree or
              any court or government agency or instrumentality that questions
              the validity of this Agreement and/or any of the Incorporated
              Agreements to be executed by Digital in connection herewith or
              any action taken or to be take in connection herewith or
              therewith, or that challenge the validity, enforceability or
              ownership of any of the Proprietary Rights. There is no action,
              suit, proceeding or investigation by Digital currently pending or
              that Digital currently intends to initiate that questions or has
              the potential to harm the validity of this Agreement and/or any 
              of the Incorporated Agreements to be executed by Digital in 
              connection herewith or any action taken or to be taken in 
              connection herewith or therewith, or the validity, enforceability 
              or ownership of any of the Proprietary Rights.


                                         -20-

<PAGE>


    12.6      OWNERSHIP OF ASSETS. Digital owns all of the Middleware Assets
              free and clear of all liens, security interests and other
              encumbrances, excepting those contained in the Assumed Contracts
              and any other liabilities expressly being assumed by BEA under
              this Agreement and Digital can transfer the same to BEA without
              limitation of any kind.

    12.7.     DISCLOSURE. The representations and warranties of Digital
              contained in this Agreement do not contain any untrue statement
              of a material fact or omit to state a material fact necessary in
              order to make the statements contained herein or therein not
              misleading in light of the circumstances under which they were
              made. Digital has no present intention to transfer this Agreement
              or any of its rights or obligations hereunder or under the
              Incorporated Agreements to be executed by Digital in connection
              herewith to any third party.

    12.8.     NOTICE OF MATERIAL CHANGE. Digital agrees to give BEA prompt
              written notice of any material change which occurs prior to the
              Closing in any of the information contained in the
              representations and warranties made by Digital in this Agreement
              and/or the Schedules and Exhibits attached hereto.

    12.9.     TITLE MIDDLEWARE ASSETS.

              12.9.1.   Digital has good and marketable title to all of the
                        Middleware Assets and to all other assets to be
                        transferred by Digital to BEA in accordance with this
                        Agreement, and has the sole and exclusive right to use,
                        sell, license, dispose of or brings action for the
                        infringement of the Copyrights, Patents and Trademarks.

              12.9.2.   Digital currently is listed in the records of the
                        appropriate United States, state or foreign agency as
                        the sole owner of record for each of the Patents and
                        Trademarks to be assigned to BEA hereunder which is set
                        forth on Schedule C, attached hereto and made a part
                        hereof (the "Registrations").

              12.9.3.   Digital has no royalties, honoraria, fees or other
                        payments due and payable to any third party in
                        connection with the Proprietary Rights to be assigned
                        to BEA hereunder or other elements of the Middleware
                        Assets, including to any person by reason of ownership,
                        use, licensure, sale or disposition of any of the same,
                        the nonpayment of which has resulted or will result in
                        the loss or impairment of any of the foregoing.

              12.9.4.   Except as set forth on Schedule C, attached hereto and
                        made a part hereof, no third party product or property
                        was used in or is necessary for the development of the
                        Software or Documentation or is or is intended to be
                        embedded in, included with, or shipped with the
                        Software (whether as a runtime module or otherwise).

              12.9.5.   None of the Middleware Assets or the other assets to be
                        transferred by Digital to BEA in accordance with this
                        Agreement, or the use thereof, (i) are subject to any
                        easements or restrictions or to any mortgages,


                                         -21-

<PAGE>

                        liens, pledges, charges, security interests,
                        encumbrances or encroachments, or to any rights of
                        others of any kind or nature whatsoever, or (ii)
                        contravene any applicable law or ordinance or any other
                        administrative regulation or violates any restrictive
                        covenant or any provision of law. There are no
                        agreements or arrangements between Digital and any
                        third party which have any effect upon Digital's title
                        to or other rights respecting the Middleware Assets 
                        or such other assets, including the right to transfer 
                        the same as contemplated by this Agreement.


    12.10.    TRANSFERRED COMPUTERS. The Transferred Computers are in good
              working condition.

    12.11.    CONDITION OF PROPERTY. All of the Registrations have been duly
              maintained, including the submission of all necessary filings in
              accordance with the legal and administrative requirements of the
              appropriate jurisdictions, has not lapsed, expired or been
              abandoned, and is valid, subsisting, in propr form and
              enforceable.

    12.12.    ADEQUACY OF PROPERTY. Except for commercially available
              application software and software development tools, the
              Middleware Assets constitute all of the assets and information
              necessary to conduct, in all material respects, the activity of
              the development and maintenance of the Software as it is being
              currently conducted.

    12.13.    CURRENT USE. The marketing, manufacture, development, use, sale,
              license, or sublicense of any Proprietary Rights, Software or
              Documentation or any other Middleware Asset in the manner
              currently so done by Digital does not (i) violate any license or
              agreement with any third party, or (ii) infringe on, or otherwise
              conflict with, the rights of any person, nor has such violation
              or an infringement been alleged or noticed to Digital. Digital
              has not in connection with the Middleware Assets or any portion
              thereof received any written notice that it, or any of its
              customers or distributors, has infringed any copyright, patent,
              trademark, trade name, or other intellectual or industrial
              property right of any third party or misappropriated or misused
              any invention, trade secret or other proprietary information
              entitled to legal protection. Nor has Digital asserted any such
              claim of infringement, misappropriation or misuses against any
              third party in connection with the Middleware Assets.

13. REPRESENTATIONS AND WARRANTIES OF BEA

    13.1.     ORGANIZATION AND STANDING; CERTIFICATE AND BYLAWS. BEA is a
              corporation duly organized and existing under, and by virtue of,
              the laws of the State of Delaware and is in good standing under
              such laws.

    13.2.     CORPORATE POWER. BEA has all requisite corporate power to execute
              and deliver this Agreement and all agreements to be executed and
              delivered by BEA pursuant to the terms hereof and to carry out
              and perform its obligations under the terms of this Agreement and
              such other agreements.


                                         -22-

<PAGE>

    13.3.     AUTHORIZATION. All corporate action on the part of BEA, its
              directors and its stockholders necessary for the authorization,
              execution, delivery and performance of this Agreement and any
              other agreements contemplated hereby has been taken. This
              Agreement and any other agreements contemplated hereby, when
              executed and delivered by BEA, will constitute valid and binding
              obligations of BEA, enforceable in accordance with their
              respective terms.

    13.4.     COMPLIANCE WITH OTHER INSTRUMENTS, NO CONFLICTS, ETC. The
              execution, delivery and performance of and compliance with this
              Agreement and the Incorporated Agreements to be executed by BEA
              in connection herewith will not result in any violation of, or
              conflict with, or constitute a default under BEA's Certificate of
              Incorporation or Bylaws, or under any agreement to which BEA is a
              party, or result in the creation of, any mortgage, pledge, lien,
              encumbrance or charge upon any of the properties or assets of
              BEA. No consent of any person not a party to this Agreement and
              no consent of any governmental authority is required to be
              obtained on the part of BEA to permit the consummation of the
              transactions contemplated by this Agreement, except those
              consents expressly identified in this Agreement. BEA is not in
              violation of any term of its Certificate of Incorporation or
              Bylaws, or in any material respect of any term or provision of
              any mortgage, indebtedness, indenture, contract, agreement,
              instrument, judgment or decree, order, statute, rule or
              regulation applicable to BEA if it could have an adverse impact
              on the transactions contemplated by this Agreement.

    13.5.     LITIGATION, ETC. There are no actions, suits, proceedings,
              oppositions, challenges or investigations pending against BEA or
              its officers or properties before any court, arbitrator or
              governmental agency (or, to the best of BEA's knowledge, is there
              any threat thereof), and BEA is not a party to or subject to the
              provisions of any order, writ, injunction, judgment, or decree or
              any court or government agency or instrumentality that questions
              the validity of this Agreement and/or any of the Incorporated
              Agreements to be executed by BEA in connection herewith or any
              action taken or to be taken in connection herewith or therewith.
              There is no action, suit, proceeding or investigation by BEA
              currently pending or that BEA currently intends to initiate that
              questions or has the potential to harm the validity of this
              Agreement and/or any of the Incorporated Agreements to be
              executed by BEA in connection herewith or any action taken or to
              be taken in connection herewith or therewith.

    13.6.     DISCLOSURE. The representations and warranties of BEA contained
              in this Agreement, do not contain any untrue statement of a
              material fact or omit to state a material fact necessary in order
              to make the statements contained herein or therein not misleading
              in light of the circumstances under which they were made. BEA has
              no present intention to transfer this Agreement or any of its
              rights or obligations hereunder or under the Incorporated
              Agreements to be executed by BEA in connection herewith to any
              third party.


                                         -23-

<PAGE>

    13.7.     NOTICE OF MATERIAL CHANGE. BEA agrees to give Digital prompt
              written notice of any material change which occurs prior to the
              Closing in any of the information contained in the
              representations and warranties made by BEA in this Agreement
              and/or the Schedules and Exhibits attached hereto.

14. INDEMNIFICATION


    14.1.     SURVIVAL OF REPRESENTATIONS. Subject to the limitations and other
              provisions of this Section 14, the representations, warranties,
              covenants and agreements of the parties contained in this
              Agreement shall survive the Closing.

    14.2.     DIGITAL'S AGREEMENT TO INDEMNIFY. Subject to the terms and
              conditions of this Section 14, Digital hereby indemnifies and
              agrees to defend and hold harmless BEA and any stockholder,
              partner, officer, director, employee, agent or representative of
              BEA (collectively, the "BEA GROUP"), at any time after the
              Closing, from and against all damages, incurred by the BEA Group
              or any member thereof resulting from or relating to (i) a breach
              of any representation or warranty of Digital contained in this
              Agreement, or (ii) the non-performance of any covenant or
              obligation to be performed on the part of Digital under this
              Agreement, or (iii) any claim asserted against BEA by a third
              party in respect of any liability of Digital not assumed by BEA
              under this Agreement.

    14.3.     BEA'S AGREEMENT TO INDEMNIFY. Subject to the terms and conditions
              of this Section 14, BEA hereby indemnifies and agrees to defend
              and hold harmless Digital and any stockholder, partner, officer,
              director or employee of Digital (collectively, the "DIGITAL
              GROUP"), at any time after the Closing, from and against all
              damages incurred by the Digital Group or any member thereof
              resulting from or relating to (i) a breach of any representation
              or warranty of BEA contained in this Agreement or (ii) the
              non-performance of any covenant or obligation to be performed on
              the part of BEA under this Agreement or (iii) any claim asserted
              against Digital by a third party in respect of any liability
              assumed by BEA under this Agreement.

    14.4.     INDEMNIFICATION PAYMENTS AND SURVIVAL.

              (a)  No action may be brought by any person seeking
              indemnification hereunder (an "Indemnified Person") with respect
              to any indemnifiable claim under this Section 14 more than two
              (2) years after the Closing Date.

              (b)  No Claim may be made against a party providing
              indemnification hereunder (an "Indemnifying Party") pursuant to
              its indemnification obligations set forth in Section 14.2 or 14.3
              with respect to any individual item of damage unless and until
              the aggregate of all such damages actually incurred by the
              Indemnified Person exceeds $175,000 (the "Threshold Amount") and
              the Indemnified Person's right to indemnification hereunder shall
              only be with respect to such amounts in excess of the Threshold
              Amount. In the case of any claim for Indemnification
              made by the Indemnified Person to the Indemnifying Party in which
              the Indemnified Person asserts for the first time that the
              Threshold Amount has been or will be exceeded after or upon
              satisfaction of the claim for which the Indemnified Person seeks
              indemnification, the Indemnified Person shall set forth in
              reasonable detail the


                                         -24-

<PAGE>

              Damages, including the basis therefore, which have exceeded or
              which, together with the claim being made, will exceed the
              Threshold Amount. Upon a good faith presentation of such
              assertion, the Indemnifying Party will assume its obligations
              under this Article 14. The indemnifying party's obligation to
              indemnify the Indemnified Person and hold it harmless under
              Section 14.2 or 14.3 shall in no event exceed $11,000,000. The
              Indemnifying Party shall not be obligated for any indirect, 
              special or consequential damages incurred by the Indemnified 
              Person.

              (c)  For purposes of determining the amount of damages incurred
              by an Indemnified Person, such damages shall be net of any
              insurance payment actually received by the Indemnified Person in
              compensation for the same damages for which indemnification is
              sought and shall be reduced by the amount of any tax benefits to
              be realized by the Indemnified Person with respect to the matter
              which was the basis for the damages for which indemnification is
              sought.

              (d)  Investigations; Waivers. The survival periods and rights to
              indemnification provided for in this Section 14 shall remain in
              effect, notwithstanding any investigation at any time by or on
              behalf of any party hereto or any waiver of any party hereto of
              any condition to such party's obligation to consummate the
              transactions contemplated hereby.

    14.5.     CONDITIONS OF INDEMNIFICATION. (a) Notice of Claims. The
              Indemnified Person shall promptly notify the Indemnifying Party
              of any fact upon which the Indemnified Person intends to base a
              claim for indemnification hereunder ("Notice of Claim"). Notice
              shall in all events be considered prompt if given (a) no later
              than thirty (30) days after the Indemnified Person learns of a
              fact or facts giving rise to a right of indemnification or (b) if
              later, in sufficient time to allow the Indemnifying Party to
              exercise its rights pursuant to this Section 14.5 without any
              material impairment of or prejudice to the Indemnified Person in
              the exercise of such rights, in the reasonable judgment of the
              Indemnified Person.

              (b)  Direct Claims. If within 30 days after the Indemnified
              Person shall have given a Notice of Claim that relates to a
              direct claim of the Indemnified Party, the Indemnifying Party
              shall not have objected to such demand for indemnification or its
              amount, by notice to the Indemnified Person, the demand for
              indemnification and the amount of such demand, or the manner of
              determining such amount, described in such Notice shall be deemed
              to have been agreed to by the Indemnifying Party and determined
              as of the last day of such 30-day period.

              (c)  Defense of Third-Party Claims.

                   (i)       Subject to subsection (iii) below if damages arise
              out of a third party claim seeking recovery of money damages (a
              "Money Claim"), the Indemnifying Party shall have the right, at
              its option and expense, to assume the defense of such Money Claim
              with counsel reasonably acceptable to the Indemnifying Person.
              Notwithstanding the foregoing, the Indemnified Person shall have
              the right to employ its own counsel in any such case but the fees
              and expenses of such counsel shall be at the expense of such
              Indemnified Person unless (x) the employment of such counsel
              shall have been authorized in writing by the Indemnifying Party
              in



                                         -25-


<PAGE>

              connection with the defense of such action at the expense of the
              Indemnifying Party or (y) the Indemnifying Party shall not have
              employed counsel to have charge of the defense of such action
              within a reasonable time after the Notice of Claim is given, or,
              having assumed such defense, fails to pursue it within reasonable
              time or (z) the named parties to such claim include both the
              Indemnified Person and the Indemnifying Party and such
              Indemnified Person shall have been advised by counsel that
              counsel employed by the Indemnifying Party would, under
              applicable professional standards, have a conflict in
              representing both the Indemnifying Party and such Indemnified
              Person, in any of which events such fees and expenses of one
              additional counsel for the Indemnifying Party shall be borne by
              the Indemnifying Party. In no event shall the Indemnifying Party
              be liable for fees and expenses of more than one counsel for all
              indemnified parties (in addition to any local counsel) separate
              from its own counsel in connection with any one action or
              separate but similar or related actions in the same jurisdiction
              arising out of the same general allegations or circumstances. An
              Indemnified Person shall have the right to settle or compromise
              any Money Claim and recover the amount paid in such settlement
              from the Indemnifying Party without the consent of any
              Indemnifying Party if the Indemnified Person has given written
              notice thereof to the Indemnifying Party and the Indemnifying
              Party has failed to assume the defense of the Money Claim or,
              having assumed the defense, has failed to diligently pursue it
              within a reasonable length of time. Any Indemnifying Party shall
              have the right to settle or compromise any Money Claim against an
              Indemnified Person with the consent of the Indemnified Person
              provided that the terms of such settlement or compromise provide
              for the unconditional release of the Indemnified Person and
              require the payment of money damages only by the Indemnifying
              Party.

                   (ii)      Subject to the provision of subsection (iii) below
              if an Indemnified Person determines not to accept a monetary
              settlement of any such Money Claim following the Indemnified
              Person's receipt of written notice from the Indemnifying Party
              requesting the Indemnifying Party's acceptance of such a
              settlement for an amount (the "Settlement Amount") agreed to in
              writing by the Indemnifying Person and the parties (other than
              the Indemnified Person) to such litigation or prospective
              litigation and a judgment in excess of the Settlement Amount is
              thereafter rendered against the Indemnified Person, no claim for
              indemnification under Section 14.2 or 14.3, as the case may be,
              may thereafter be made with respect to such litigation or
              prospective litigation against the Indemnifying Party in excess
              of the Settlement Amount consented to by the Indemnifying Party.

                   (iii)     If damages arise out of a third party claim
              seeking equitable relief alone or in addition to monetary damages
              and, if such equitable relief, standing alone, if obtained would
              materially and adversely affect the business, operations, assets
              or financial condition of the Indemnified Person (an "Equitable
              Claim"), the Indemnified Person shall be entitled to defend such
              Equitable Claim with counsel reasonably acceptable to the
              Indemnifying Party in a reasonable manner under the circumstances
              and at the reasonable expense of the Indemnifying Party, which
              shall be provided by counsel to the Indemnified Person with
              regular information regarding the costs of such defense. The
              Indemnifying Party shall be entitled to participate at its own
              expense in the defense of any such Equitable Claim. The
              Indemnified Person shall make no settlement, compromise,
              admission, or


                                         -26-


<PAGE>

              acknowledgement which would give rise to liability on the part 
              of any Indemnifying Party without the prior written consent of 
              the Indemnifying Party, which shall not be unreasonably withheld 
              or delayed.

                   (iv)      The parties shall extend reasonable cooperation to
              one another in connection with the defense of any third-party
              claim pursuant to this Section 14.5 and, in connection therewith,
              shall furnish such records, information, and testimony and attend
              such conferences, discovery proceedings, hearings, trials, and
              appeals as may be reasonably requested.

15. TERMINATION

    15.1.     METHODS OF TERMINATION. The transactions contemplated herein may
              be terminated and/or abandoned at any time prior to the Closing
              by (i) mutual written agreement of BEA and Digital, or (ii) by
              either party if the Closing shall not have occurred on or prior
              to April 30, 1997.

    15.2      PROCEDURE UPON TERMINATION PRIOR TO CLOSING. In the event of
              termination or abandonment pursuant to Section 15.1 hereof,
              written notice thereof shall be given to the other party hereto
              and the transactions completed by this Agreement shall be
              terminated and/or abandoned, without further action by BEA or
              Digital. If the transactions contemplated by this Agreement are
              terminated and/or abandoned as provided herein, each party will
              redeliver all documents, work papers, confidential information
              and other material of the other party relating to the
              transactions contemplated hereby, whether obtained before or
              after the execution of this Agreement, to the party furnishing
              the same. A party hereto who shall have satisfied in full all of
              the obligations of such party under this Agreement which were to
              have been satisfied by such party prior to the Closing and who
              shall have not breached any representation, warranty, covenant or
              agreement of such party contained in this Agreement shall not
              have any liability or further obligation to the other party to
              this Agreement.

    15.3      EFFECT OF TERMINATION. The mutual confidentiality obligations of
              Digital and BEA pursuant to Section 8 hereof shall survive any
              termination of this Agreement.

16. MISCELLANEOUS

    16.1      PUBLICITY. Each of the parties acknowledges the importance of
              appropriate disclosures in positioning the relationship between
              the two companies to the distribution channel, the press,
              customers and others.

              16.1.1.        Each of the parties agrees that by no later than
                             fifteen (15) days following the Execution Date,
                             BEA and Digital will each issue a press release
                             regarding the execution of this agreement. Such
                             press release shall identify this Agreement as a
                             major strategic partnership. The press release to
                             be issued by Digital shall declare Digital's
                             commitment to Tuxedo, including without limitation
                             as the premier middleware for Open Systems mission
                             critical computing. The press release to be issued
                             by BEA shall endorse strongly Digital's 64 bit
                             computing


                                         -27-


<PAGE>
                             capabilities and Alpha platform technology, as
                             evidenced by the Middleware purchases it is making
                             pursuant to this Agreement, as well as Digital's
                             Alpha systems as the premier high performance
                             commercial UNIX platform available on the market
                             today. Each press release shall be subject to the
                             other party's approval, not to be unreasonably
                             withheld or delayed.

                   16.1.2.   Within 30 days of the Execution Date, BEA and
                             Digital will jointly announce a strategic
                             relationship in an appropriate mutually-agreed to
                             form and forum. During this time and prior to the
                             announcement, Digital and BEA will make diligent
                             efforts to control the confidentiality, public
                             image and positioning of the relationship by doing
                             the following under non-disclosure:

                             -    jointly brief appropriate industry analysts
                                  and/or press, with proper embargoes, about
                                  the Agreement in an effort to have them
                                  properly prepared for the announcement and
                                  potentially be used as spokespersons;

                             -    pre-announce the Agreement to a defined group
                                  of existing key customers of the Former
                                  Digital Products with a goal of recruiting
                                  several major customers as spokespeople to be
                                  used at the announcement to make live
                                  presentations and/or provide supporting
                                  quotes;

                             -    brief appropriate partners involved with the
                                  development or distribution of the Former
                                  Digital Products;

                             -    build employee confidence and commitment to
                                  the transition by recruiting appropriate
                                  internal champions within the Digital
                                  technical community to help promote the
                                  movement of the products and personnel from
                                  Digital to BEA;

                             -    brief all existing employees who may be
                                  offered a position with BEA on the Agreement
                                  and appropriate positioning;

                             -    appoint appropriate "authorized"
                                  spokespersons who will be the only source for
                                  external dissemination of information about
                                  the Agreement;

                             -    prior to any external briefings or
                                  announcements to analysts, press, partners or
                                  customers, BEA and Digital brief employees
                                  who may become engaged in general marketing
                                  or sales activities.

                   16.1.3.   Each of the parties agrees that until six (6)
                             months following the Closing Date, no press 
                             release or other disclosures by company 
                             representatives shall conflict with the initial 
                             press releases approved by


                                         -28-
<PAGE>

                   the parties pursuant to Section 16.1.1 hereof without the
                   prior written consent of the other party, such consent not
                   to be unreasonably withheld or delayed.  In the event no
                   written response is received by a press release or
                   disclosure within two (2) business days of its receipt by a
                   party, such press release or disclosure shall be deemed
                   approved.

    16.2.     NOTICES.  Unless otherwise agreed to by the parties in writing,
              all notices required under this Agreement and all requests,
              demands and other communications hereunder, shall be deemed
              effective when received and made in wiring by either (i)
              registered mail, (ii) certified mail, return receipt requested,
              or (iii) overnight mail, addressed and sent to the attention of:


                   Digital Equipment Corporation      BEA Systems, Inc.
                   129 Parker Street                  385 Moffett Park Drive
                   Maynard, Massachusetts 01754       Suite 105
                                                      Sunnyvale, CA 94089-1209
                   Attn: Manager Digital External     Attn: Ed Durney,
                         Resources Group                    General Counsel

              with a copy of non-technical notes to:

                   Digital Equipment Corporation      Morrison & Foerster LLP
                   111 Powdermill Road                1290 Avenue of Americas
                   Maynard, Massachusetts 01754       New York, New York 10104
                   Attn: Eric C. Thorp, Senior        Attn: John B. Kennedy
                         Counsel

    16.3.     RELATIONSHIPS OF THE PARTIES.  It is understood and agreed that
              each of the parties hereto is an independent contractor, and that
              neither party is, or shall be considered to be, by virtue of this
              Agreement, an agent or representative of the other party for any
              purpose.

    16.4.     ASSIGNMENT.  Neither party may assign this Agreement except to
              one of its Subsidiaries or in connection with a merger,
              consolidation, or sale of all or substantially all of the
              assigning party's relevant business or assets, or with the prior
              written consent of the other party.  Any attempted assignment in
              violation of this Section 16.4 without consent shall be null and
              void.  Where required, no party shall unreasonably withhold or
              delay consent.

    16.5.     BINDING EFFECT.  This agreement shall be binding on all parties
              hereto, and shall be binding upon and inure to the benefit of each
              party and its respective permitted successors and assigns.

    16.6.     WAIVER; MODIFICATION; AMENDMENT.  No term or provision hereof
              will be considered waived by either party, and no breach excused
              by either party, unless such waiver or consent is in writing
              signed on behalf of the party against whom the waiver is
              asserted.  No consent by either party to, or waiver of, a breach
              by either party, whether express or implied, will constitute a
              consent to, waiver of, or excuse of any other different, or
              subsequent, breach by either party.  This Agreement, including
              the Schedules and Exhibits attached hereto, may not be modified or


                                         -29-

<PAGE>

              amended except by an instrument in writing duly signed by or on
              behalf of the parties hereto.

    16.7.     FORCE MAJEURE.  Each of the parties hereto shall exert diligence
              in performing its obligations under this Agreement, but neither
              shall be liable in any manner whatsoever for failure to perform
              or delay in performing such obligations, if and to the extent 
              and for so long as such failure or delay in performance or breach
              is due to natural disasters, strikes or labor disputes, natural 
              forces, or other acts of G-d or cause reasonably beyond the 
              control of such party.  Any party desiring to invoke this Section
              16.7 shall notify the other in writing of such desire and shall 
              use reasonably efforts and due diligence to resume performance of 
              its obligations.

    16.8.     UNITED NATIONS.  The parties expressly exclude, if applicable,
              the application of the United Nations Conventions on Contracts
              for the International Sale of Goods.

    16.9.     SURVIVAL.  The provisions of this Agreement which by their nature
              extend beyond the expiration or termination of this Agreement
              will survive and remain in effect until all obligations are
              satisfied.

    16.10.    SEVERABILITY.  If any part of this Agreement is found invalid or
              unenforceable, that part will be amended to achieve as nearly as
              possible the same economic and practical effect as the original
              provision and the remainder of this Agreement will remain in full
              force and effect.

    16.11.    NO INTERPRETATION AGAINST DRAFTER.  The terms and provisions of
              this Agreement shall not be construed against the drafter or
              drafters hereof.  All parties hereto agree that the language of
              this Agreement shall be construed as a whole according to its
              fair meaning and not strictly for or against any of the parties
              hereto.

    16.12.    GOVERNING LAW; JURISDICTION.  This Agreement shall be governed
              and enforced in accordance with the substantive law of the
              Commonwealth of Massachusetts, without regard to any such laws or
              regulations that may direct the application of the law of any
              other jurisdiction.  Each party hereby irrevocably agrees that
              any action relating to this Agreement or the Middleware Assets
              shall be instituted, prosecuted and determined in the court of
              competent jurisdiction in Boston, Massachusetts and that it shall
              not commence any action or proceeding arising out of any dispute
              between Digital and BEA with respect hereto and thereto in any
              other jurisdiction.  Each party hereby irrevocably submits, for
              itself and its property, to the nonexclusive jurisdiction or any
              Federal or State Court of the United States of America sitting in
              Boston, Massachusetts area, and any appellate court from any
              thereof, in any action or proceeding arising out of or relating
              to this Agreement or the Middleware Assets.  Digital further
              irrevocably consents to the service of process in any such action
              or proceeding by the mailing of a copy of such process to it at
              the address set forth above.

    16.13.    ENTIRE AGREEMENT.  This Agreement, together with the Schedules
              and Exhibits attached hereto, constitutes the entire agreement
              between the parties relating to this subject matter and
              supersedes all prior or simultaneous representations,
              discussions, negotiations and agreements with respect thereto,
              whether written or oral.


                                         -30-

<PAGE>

    16.14.    PARAGRAPH HEADINGS AND COUNTERPARTS.  The paragraph and section
              headings in this Agreement are for convenience of reference only
              and shall not be deemed to alter or affect any provisions hereof.
              This Agreement may be executed simultaneously in any number of
              counterparts, each of which shall be deemed an original but all
              of which shall constitute one and the same instrument.

    16.15.    Neither party shall have a right of set off against the other.

    IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
    by their duly authorized representatives, effective as of the date first
    above written.

    DIGITAL EQUIPMENT                       BEA SYSTEMS, INC.
    CORPORATION

    By: /s/ (illegible)                     By: /s/ Edward W. Scott, Jr.
       ----------------------------            ----------------------------
    Name:   (illegible)                     Name: Edward W. Scott, Jr.
         --------------------------              --------------------------
    Title:  (illegible)                     Title: Executive Vice President
          -------------------------               -------------------------
    Date: 1/30/97                           Date: January 31, 1997
         --------------------------              --------------------------


                                         -31-

<PAGE>

                           LISTS OF SCHEDULES AND EXHIBITS


         Schedule A:                   Assumed Contracts
         Schedule B:                   Software Descriptions
         Schedule C:                   Digital Registrations
         Schedule D:                   Transferred Computers
         Schedule E:                   Transferred Employees



                                   ***************

         Exhibit I:                    Consulting Agreement Between Digital and
                                       BEA
         Exhibit II:                   Distribution Agreement Between Digital
                                       and BEA
         Exhibit III:                  Bill of Sale
         Exhibit IV:                   Assignment of Trademarks and Patents
         Exhibit V:                    Promissory Note

<PAGE>

                                      SCHEDULE A

                                  ASSUMED CONTRACTS

         PARTNER                     AGREEMENT TYPE              CONTRACT #
         -------                     --------------              ----------

Caldera, incorporated            Distribution                        #1
Logica North America             Source Code                         #2
Intelligent Wave, Inc.           Source Code                         #3
PeerLogic, Incorporated          Engineering For Hire                #4
Visual Edge Software Ltd.        Engineering For Hire                #5
LINKVEST SA                      Engineering For Hire                #6


                                     Page 1 of 1

<PAGE>

                                      SCHEDULE B
                                SOFTWARE DESCRIPTIONS


                   PRODUCT NAME                                SPD #

DECmessageQ for OS/2, Version 3.2                             53.34.00
DECmessageQ for MS-Windows Client, Version 3.2                53.35.01
DECmessageQ for MQ Series, Version 3.2                        56.30.01
DECmessageQ for Windows NT, Version 3.2                       47.90.02
DECmessageQ for UNIX, Version 3.2                             39.25.06
DECmessageQ for Open VMS, Version 3.2                         46.25.04
ObjectBroker for UNIX, Version 2.7                            47.07.04
ObjectBroker for Microsoft Windows, Version 2.7               37.76.05
ObjectBroker for Open VMS, Version 2.7                        44.12.04
ObjectBroker for Win32, Version 2.7                           50.73.04
The ObjectBroker Desktop Connection                        "White Paper"
R/3 BusinessBus Wrapper Technology                         "White Paper"


                                     Page 1 of 1

<PAGE>

                                      SCHEDULE C

                                DIGITAL REGISTRATIONS

Mark      Territory      Application Date & Number    Registration Date & Number
- ----      ---------      -------------------------    --------------------------




                                     Page 1 of 2

<PAGE>

                                   SCHEDULE C

                              APPLICATIONS/PATENTS

<TABLE>
<CAPTION>

Matter No.:  Country Code: Application No. Filed Date:    Patent No.:  Issue Date    Patent Status     Matter Title:
- ------------------------------------------------------------------------------------------------------------------------------------
<S>          <C>           <C>             <C>            <C>          <C>           <C>               <C>
PD90-0327         US         07/567,298     14-Aug-90      1,280,610    19940118            I           METHODS AND APPARATUS FOR
                                                                                                        IMPLEMENTING DATA BASES TO
                                                                                                        PROVIDE OBJECT-ORIENTED
                                                                                                        INVOCATION OF APPLICATIONS
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         AU           79309/91     26-Jun-91         638138    19931011            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         CA          2,049,133     13-Aug-91                                       P
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         JP          202703/91     13-Aug-91                                       P
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         TW           80106381     13-Aug-91       NI-55644    19920722            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         GB         91306172.7      8-Jul-91         472279    19950816            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         FR         91306172.7      8-Jul-91         472279    19950816            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         DE         91306172.7      8-Jul-91     69112156.7    19950816            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         IT         91306172.7      8-Jul-91         472279    19950816            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0327         NL         91306172.7      8-Jul-91         472279    19950816            I
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275         US         07/567,389     14-Aug-90                                       A           METHODS AND APPARATUS FOR
                                                                                                        PROVIDING DYNAMIC INVOCATION
                                                                                                        OF APPLICATIONS IN A
                                                                                                        DISTRIBUTED HETEROGENEOUS
                                                                                                        ENVIRONMENT
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275         AU           79454/91     26-Jun-91         639802    19931130            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275         CA          2,049,121     13-Aug-91      2,049,121    19960813            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275         JP          202700/91     13-Aug-91        2011115    19960202            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275         EPO        91306128.9      5-Jul-91                                       P
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275         TW           80106379     13-Aug-91       NI-68177    19950215            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0275CON      US         08/148,607      3-Nov-93      5,341,478    19940823            I
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326         US         07/567,303     14-Aug-90                                       A           METHOD AND APPARATUS FOR
                                                                                                        PROVIDING A CLIENT INTERFACE
                                                                                                        TO AN OBJECT-ORIENTED
                                                                                                        INVOCATION OF AN APPLICATION
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326         TW           80106380     13-Aug-91       NI-56710    19920923            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326         AU           79310/91     26-Jun-91         628264    19930121            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326         CA          2,049,143     13-Aug-91                                       P
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326         JP          202702/91     13-Aug-91        1929856    19950512            I
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326         EPO        91306127.1      5-Jul-91                                       P
- ------------------------------------------------------------------------------------------------------------------------------------
PD90-0326CON      US         08/263,901     22-Jun-94                                    PNOA
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TRADOC. 1001380.v1
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2 of 2

<PAGE>

                                      SCHEDULE D

                                TRANSFERRED COMPUTERS

FAMILY        DEVICE                   DESCRIPTION              UNIT
                                                                COUNT

PC            PC-1486 LAPTOP           HINOTECT475 B#58477      1
                                       HINOTECT475 B#76689      1
                                       HINOTECT475; FAUST       1
                                       GROUP
              PC-PENTIUM/60            780WW                    1
PRINTERS      PRINTER-LASER            LN03R PRINTER            1
                                       LPS17-DA                 1
WS-MIPS       WS-MIPS                  DS3100                   1
                                       REV PMAX ESG             1
              BONDA433                 DECPC/486/33             1
              DN253S1-J9               ALPHASERVER 2100A        1
              FLAMINGO PROTO           FLAMING SEED #628        1
              FR-929AA-WC              DECPC VENTURIS           5
                                       5133FP
              FR959AA-WC               DECPC VENTURIS           1
                                       5133FP
              HP0000SVRSYS             HP9000SVR SYS            1
              MAC8100                  MAC8100                  1
              PB47A-CA                 ALPHASTATION             3
                                       255/233
              SPARCSTN IPX             SPARCSTN IPX             1
              TC260-FA                 SCSI/BM 3490 TAPE DR     1
Disk          Disk-Controller          KZESC-BA                 1
                                       SCSI CENTRLR             1
                                       DISK/TAPE                4
                                       HSC5X-BA IN 07218911     1
                                       HSC70-AA                 2
              Disk-RA60                RA60-00                  4
                                       RA60-AA                  1
              Disk-RA81                RA81-AA                  1
              Disk-RA82                9.7GB STORAGE ARRAY      1
                                       RA82 IN SA482            8
                                       SA482-AA                 2
                                       SA600 CAB                2
                                       SA600-XA                 1
              Disk-RA90                1 2 GB DISK              2
                                       RA90 IN SA600            8

                                     Page 1 of 7

<PAGE>

              Disk-RA92                RA92 DISK DRIVE          1
              Disk-RFxx                RF71 DISK SUBSYSTEM      1
              Disk-RZ26                BA350-JA                 1
              Disk-RZ28                RZ28 DISK                2
                                       RZ28-VA DISK             4
                                       UPGRADE
              Disk-RZ29                RZ29 ADDS                1
              Disk-RZ55                RZ55                     2
                                       RA55 IN EXPANSION        1
                                       RZ55 IN EXPANSION        1
                                       BO
                                       RZ55 IN EXPANSION        5
                                       BOX
              Disk-RZ56                SZ12B-XA RZ56            3
                                       RZ57 DISK                2
                                       SZ12C-CA DISK            1
                                       SZ12C-XA DISK            1
Network       Network                  CMHUB-AA                 1
PC            PC-i386                  COLOR DECSTATION         1
                                       325
                                       DEC PC 433               1
                                       DEC PC 435               1
                                       WORKSTATION
                                       DECSTATION 325C          1
                                       DJ-PC463-A2              1
                                       DJ-PC463-BB              2
                                       PC435-AA                 1
                                       PC445-Y2                 1
                                       PC462-AA                 1
                                       PC462-Y2                 2
                                       PC463-AA                 1
                                       PC500-CA VM W/OPT        1
                                       PCW10-AA
              PC-i36-LAPTOP            COLOR DECSTATION         1
                                       325
                                       DEC PC 433               1
                                       DEC PC 435               1
                                       WORKSTATION
                                       DECSTATION 325C          1
                                       CJ-PC463-A2              1
                                       CJ-PC463-BB              2
                                       PC435-AA                 1
                                       PC445-Y2                 1
                                       PC462-AA                 1
                                       PC462-Y2                 2

                                     Page 2 of 7

<PAGE>

                                       PC463-AA                 1
                                       PC500-CA VM W/OPT        1
                                       PCW10-AA                 1
              PC-i386-LAPTOP           320 PC PORTABLE          1
                                       DEC PC 320P LAPTOP       2
                                       DEC PC 325P              2
                                       DJ-PCP10-AA              1
                                       FR-PCP35-GA              2
              PC-i486-LAPTOP           DEC PC425 LAPTOP         1
                                       FR-P62WC-AA              1
                                       HINOTECT475 B#75494      1
                                       LAPTOP                   1
                                       PCP34-DA                 1
                                       (HARTZBAND)
                                       ULTRA 450/B#145334       1
                                       ULTRA 450/B#175711       1
                                       ULTRA 450/B#53176        1
              PC-i486/100              COMPAQ 486125-PC         1
                                       DECPCXL4100              1
                                       FR-776AA-WN              1
              PC-i486/33               DEC PC 433               4
                                       DEC PC 433T PCT10-A2     2
                                       DECPC433                 1
                                       PC-PAROD1                1
              PC-i486/50               PCT25-AA                 2
              PC-i486/66               B5-OPCHI-CA              2
                                       B5-PCHI-CA               18
                                       FR-776AA-WN              1
                                       PC746 XL                 1
              PC-Pentium/133           DECPC X. SERVER 466      1
                                       FR-965AA-MD              22
              PC-Pentium/60            780AA                    3
                                       780WW                    12
              PC-Pentium/90            783WW                    5
                                                                10
                                       FR-842AA-WC              5
                                       FR873AA-WN               1
Printers      Printer-Color            300DPI COLOR             1
                                       PRINTER
              Printer-Laser            LN03 SCRIPT PRINTER      1
                                       LN03R-AA POSTCRIPT       1
                                       LN08R-CA                 1
                                       LPS17-DA                 2
                                       LPS20-C2                 1
                                       LPS20-CA                 1

                                     Page 3 of 7

<PAGE>

Server-Alpha  Server-Alpha-Law34       7HAMJ-HA                 1
              Server-Alpha-Sable       DA-251P1-FV              1
                                       DN241D1-AB0              2
                                       DN-241D1-J9              1
Server-Mips   Server-Mips              DU-55HT2-A9              2
Server-PDP11  Server-PDP11             11X84UA1UG               1
Server-Vax    Server-VAX6xxx           63AMB-YE                 2
                                       64AMA-YE                 1
                                       VAX6410 CPU              1
              Server-VAX6xxx-          KA651-AA
              Options
                                       TAPE CONTROLLER          2
Tapes         Tape-8mm                 SCSI TAPE DRIVE          1
              Tape-DAT                 PYTHON-DAB               1
              Tape-TA90                TA90                     1
              Tape-TK50                HHTK50, CTRL, EXP B      1
              Tape-TU81                TUR81-EE                 1
              Tape-TU90                SLAVE TAPE UNTI          1
                                       TA90E                    1
              Tape-TZ8x                7X875-TA                 2
Terminals     Terminal                 VT220-A2                 1
Unclassified  Disk-RDxx                RD54 DISK&               2
                                       CONTROLLER
                                       RD54fa IN VS2000         1
              Unclassified             7009-C10                 1
                                       A2897A                   2
                                       DS5K-120                 2
                                       OBJBRKR ADD              1
                                       S20TX15132P              2
Vendor HW     Vendor-Apple             APPLE MACINTOSH          1
                                       IICi
                                       MAC-85-                  1
                                       MACIICI                  1
              Vendor IBM               IBM RISC SYSTEM 6000     1
              Vendor-Sun               SUN DISK                 1
                                       SUN MONITOR              1
                                       SUN SPARCSATION IPX      1
                                       SUN TAPE                 1
                                       SUNSPARC                 3
WS-Alpha      WS-Alpha-Avanti          PB51A-CA                 1
              WS-Alpha-Famingo         ALPHA FLAMINGO           1
                                       SYSTEM
                                       WWOPTS
                                       DEC3000/500              1
                                       FLAMINGO

                                     Page 4 of 7

<PAGE>

                                       FLAMINGO                 1
                                       FLAMINGOI ALPHA          1
                                       DEC/3000
                                       PE50A-A9                 1
              WS-Alha-Flamingo         DEC3000 MODEL 800        1
              II
              WS-Alpha-Jensen          ALPHA PC                 2
                                       DECPCAXP 150             1
                                       JEN SYS                  2
                                       JEN SYSTEM               1
                                       JENSENT/NT SYSTEM        1
                                       PB222-EA                 12
                                       PB22H-CX                 1
                                       PB22H-CS(JENSEN)(20)     1
              WS-Alpha-Mustang II      PB420-AB                 1
                                       PB422-AA                 21
                                       PB422-AB                 1
              WS-Alpha-Options         PELICAN SYS ADDS         1
              WS-Alpha-Pelican         PE301-CD                 2
                                       PELICAN SYS              1
              WS-Alpha-Sandpiper       DEC PC 325P              1
                                       SANDPIPER                1
                                       SANDPIPER PROTO          1
                                       S4A-06
              WS-Alpha-Sandpiper 45    DEC 3000 MODEL 700       1
                                       UNIX
                                       WKSYS
WS-Mips       WS-Mips                  DEC5000                  1
                                       DECSTATION 3100          1
                                       DECSTATION 3100 j.j.     1
                                       DECSTATION 5000          1
                                       DECSTATION 5--/S200      2
                                       DS3100                   3
                                       DS5000                   1
                                       DS5000-PXG PM3651        1
                                       DS5000/200 PM36 1 BK     3
                                       W/O SZ
                                       PM201-CH                 4
                                       PM20A DECSTAT 3100       1
              WS-Mips-Options          MS01 IN DS3100           1
WS-Options    WS-Options               21" MINITOR              1
                                       SYSTEM UPGRADE           1
WS-RAX        WS-VAX                   630QE                    1
                                       DV-35081-A4              1
                                       DV340T1-BA MV3400        1

                                     Page 5 of 7

<PAGE>

                                       MICROVAX II              1
                                       MICROVAX II              2
                                       MV3400                   1
                                       PV3400                   1
                                       PV05A-CA                 2
                                       PV61A-AH                 1
                                       SV-LV55H-ER VSII         1
                                       VAXSERVER 3300           1
                                       VAXSTATION 2000 4MB      1
                                       VS3100 & MEMORY          1
                                       VS315-AA                 1
                                       VS315-B2                 1
                                       VS3500-SONY              1
                                       VS3520/DISKS/TAPEDRI     1
                                       VS355-AA                 1
                                       VS410-AA                 1
                                       VS410GA
                                       VSIIGPX 8 PLAN           1
                                       VX3100 & MEMORY          1
              WS-VAX-Options           12MB MEMORY              1
                                       VAXSTAT
                                       3540 UPGRADE             1
                                       SXPANSION BOX            1
                                       IN N100709729 MEMORY     1
                                       IN N100709731 MEMORY     1
                                       MX650 (IN072-19336)      1
                                       MS650-CA                 1
                                       MX65B-CA                 1
                                       MXV11-JC/AG              1
                                       SYSTEM UPGRADE           1
                                       UPGRADEFOR               1
                                       MV11/GPX
                                       VAXZ3100 MEM             1
                                       UPGRADES
X-Terminals   X-Terminal               VT1200                   2
(blank)
              DV-3601S1-BA             DV-360S1-BA              1
              FLAMINGO PROTO           FLAMINGO SEED #571       1
              MS650-BF                 16MEGMEMCA8919034Q       1
                                       C
              PC325PADD                PC325P ADD               1
              PCN 10-AA                DEC 0C 433               1
              PER40S-BA ADD            SANDPIPER ADD            1
              SZ12B-DA                 STORAGE EXPANSION        1
                                       DISK

                                     Page 6 of 7

<PAGE>

              SZ12CC1                  SZ12CC1                  1
              VS31S-A2                 VS31S-A2                 1
              VS46K-AD                 VS461-AC                 2





                                     Page 7 of 7

<PAGE>

                                   SCHEDULE E
                              TRANSFERRED EMPLOYEES

                                      [***]


                                   Page 1 of 3


<PAGE>

                                TRANSFERRED EMPLOYEES


                                        [***]

                                     Page 2 of 3

<PAGE>


                                        [***]

                                     Page 3 of 3

<PAGE>

                                     EXHIBIT I

                           CONSULTING SERVICES AGREEMENT


    This Consulting Services Agreement ("Agreement") is made by and between BEA
Systems, Inc. ("BEA") and Digital Equipment Corporation ("Digital") as of
January 31, 1997 ("Effective Date").

1.   CONSULTING SERVICES

    Digital wishes BEA to provide consulting services to Digital to help
    maintain the development direction anticipated by Digital and its customers
    for certain products acquired by BEA from Digital.  The statement of
    development direction is attached hereto as Attachment A (the "Digital
    Statement of Development Direction").

2.   STATEMENT OF WORK

    On or before July 1, 1997 BEA shall deliver to Digital a statement of work
    identifying the services BEA will perform and the deliverables it will 
    prepare in order to help maintain the development direction identified in 
    the Digital Statement of Development Direction (the "Plan").  The Plan will
    include specifications and/or requirements for each such deliverable BEA 
    will prepare and service it will perform. The Plan will identify the 
    deliverables to be completed by the quarter ending October 31, 1997, and 
    each quarter thereafter through the quarter ending July 31, 1998.  The Plan
    is subject to the approval of Director of Open Systems Middleware, not to be
    unreasonably withheld or delayed.  If Digital does not approve the Plan, and
    BEA is unwilling or unable to modify it to Digital's reasonable 
    satisfaction, then Digital shall have the right to withhold up to 50% of the
    next quarterly payment and 100% of any subsequent payments until Digital's 
    approval is obtained.  Any modifications to the Plan, once accepted by 
    Digital, may be made only by mutual agreement, in writing.
    
3.   PROFESSIONAL FEES

    The professional fees for the consulting services provided under this
    Agreement will be invoiced at a blended rate of $1,500 per person per day,
    or a rate otherwise agreed by the parties.  Travel time will be billed at
    normal rates.  BEA will provide an invoice to Digital by the end of each
    quarter, beginning with the period ending April 30, 1997.

4.   PAYMENT SCHEDULE

    Digital will make the first payment of $1,500,000 on or before April 30,
    1997 based upon a progress billing and report and an additional $1,500,000
    upon delivery of the Plan, or on July 1, 1997 if the Plan is delivered on
    or prior to that date.  After the second payment of $1,500,000, Digital
    will make all payments within thirty (30) days after the date of BEA's
    invoice.  If the deliverable associated with the invoiced period has not
    been delivered to

                                         1


<PAGE>

    Digital prior to the end of the period, Digital may withhold up to 50% of
    the next quarterly payment and 100% of all subsequent payments until the
    deliverable is delivered.  Once any unfulfilled deliverable is made by BEA
    to Digital, then, in the event BEA fails to deliver a subsequent
    deliverable, Digital may again withhold 50% of the following payment and
    100% of any subsequent payment.  Fees for any invoiced period, including
    any expenses billed, shall not exceed the applicable amount set forth
    below, and Digital shall in no event be liable for any fees invoiced in
    excess of that amount.

              Quarter                                 Not-to-Exceed Amount
              -------                                 --------------------
              July 31, 1997 - October 31, 1997        $1,500,000
              Nov. 1, 1997 - Jan. 31, 1998            $1,500,000
              Feb. 1, 1998 - Apr. 30, 1998            $1,000,000
              May  1, 1998 - July 31, 1998            $1,000,000

    Digital will pay any sales, use or other taxes imposed relating to the
    services provided under this Agreement.

5.   APPLICATION SOFTWARE AND OTHER PRODUCTS

    Unless otherwise agreed in writing, BEA will own any application software,
    reports and other products resulting from BEA's services under this
    Agreement.

6.   WARRANTY

    BEA represents and warrants to Digital that (a) all of the services will be
    performed in a professional manner, conforming to generally accepted
    industry standards, and (b) all deliverables will conform to the
    specifications and/or requirements set forth in the Statement of Work.
    Digital's sole remedy under this warranty will be either to have BEA
    correct any deficiencies in the services or deliverables or, to the 
    extent BEA fails to correct a material deficiency within thirty (30) days 
    following notice thereof from Digital, to terminate this Agreement and 
    recover appropriate damages for the deficient services.  BEA makes no 
    other warranties or representations, express or implied, by operation of law
    or otherwise, with respect to any services supplied under the Agreement. 
    BEA expressly disclaims any warranty of merchantability, fitness for a 
    particular purpose, or non-infringement.

7.   ASSIGNMENT AND SUBCONTRACTORS

    Digital may not assign this Agreement without BEA's prior written consent.
    BEA may assign this Agreement or subcontract all or any portion of the work
    to be performed by it under this Agreement, but shall retain responsibility
    for the work subcontracted.  This Agreement shall inure to the benefit of,
    and shall be binding upon, both BEA and Digital, and their respective heirs,
    legal representatives and permitted assigns.

8.   NO AGENCY

                                         2


<PAGE>

    Digital may not assign this Agreement without BEA's prior written consent.
    BEA may assign this Agreement or subcontract all or any portion of the work
    to be performed by it under this Agreement, but shall retain responsibility
    for the work subcontracted.  This Agreement shall inure to the benefit of,
    and shall be binding upon, both BEA and Digital, and their respective
    heirs, legal representatives and permitted assigns.

9.   BEA EMPLOYEES

    BEA reserves the right to determine the assignment of BEA employees.
    Digital agrees, during the period of the services and for one year
    thereafter, not to directly or indirectly solicit any BEA employee
    providing those services for employment by Digital.

10.  LIMITATION OF LIABILITY

    In no event will BEA be liable for any indirect, consequential or
    incidental damages arising out of this Agreement.  In no event will BEA's
    liability under this Agreement exceed the amounts received by BEA from
    Digital.

11.  TERMINATION

    This Agreement will commence on the Effective Date and, unless terminated
    as provided in Section 6 hereof, shall terminate on January 31, 1999.
    Provided, however, that Digital may terminate this Agreement immediately
    upon an Event of Default under the promissory note of even date in the
    principal amount of $20 million payable to Digital.  In that event, all of
    Digital's payment obligations to BEA hereunder shall terminate.

12.  MISCELLANEOUS

    This Agreement will be governed by Massachusetts law.  This Agreement
    constitutes the entire understanding between the parties relating to this
    consulting project, and supersedes all previous negotiations, commitments,
    understandings and agreements.  This Agreement can only be modified in a
    writing signed by both parties.

    DIGITAL EQUIPMENT CORPORATION           BEA SYSTEMS, INC.

    By:-------------------------            By:----------------------

    ----------------------------            -------------------------
              (Name)                                  (Name)

    ----------------------------            -------------------------
              (Title)                                 (Title)


                                         3


<PAGE>

                                    ATTACHMENT A

                                        [***]

                                         -4-


<PAGE>

                                        [***]


                                         -5-

<PAGE>

                                        [***]
<PAGE>

                                      EXHIBIT II

                                  BEA SYSTEMS, INC.
                                DISTRIBUTION AGREEMENT
                                     COVER SHEET

    This Distributor Agreement ("Agreement") is made by and between BEA Systems,
Inc. ("BEA") and Digital Equipment Corporation ("Distributor" or "Digital") as
of January 31, 1997 ("Effective Date").

    This Agreement consists of this Cover Sheet, the attached Terms and
Conditions and the attached Exhibits hereto.

    Each of the undersigned represents and warrants that he or she is duly
authorized to sign this Agreement. Each party has read, understands and agrees
to the terms and conditions of this Agreement.

BEA SYSTEMS, INC.                      DIGITAL EQUIPMENT CORPORATION

By:__________________________________  By:_____________________________________
            [Signature]                              [Signature]

Name: Edward W. Scott, Jr.             By:_____________________________________
                                                     [Print Name]

Title: Executive Vice President        Title:__________________________________

Address:   BEA Systems, Inc.           Address:   Digital Equipment Corporation
           385 Moffett Park Drive                 110 Spitbrook Road
           Suite 105                              Mail Stop 2K03-2020
           Sunnyvale, CA 94089                    Nashua, NH 03082
Attention: Edward Durney, Esq.         Attention: Timothy Yeaton, Director
           General Counsel                        Commercial Products Group

Telephone: (408) 743-0049              Telephone: (603) 881-0539

Facsimile: (408) 734-9230              Facsimile: (603) 881-8059

<PAGE>

                                  BEA SYSTEMS, INC.
                           STANDARD DISTRIBUTION AGREEMENT

                                 TERMS AND CONDITIONS

BEA and Distributor agree as follows:

1.  DEFINITIONS. For purposes of this Agreement, each capitalized term shall
    have the respective meaning set forth in this Section 1 unless this
    Agreement expressly provides otherwise.

    a.   "BEA AUTHORIZED DISTRIBUTOR" means an entity that is authorized in
         writing by BEA to distribute BEA Products.

    b.   "BEA PRODUCTS" means the BEA products identified in Exhibit A that
         Distributor is authorized to market and sell under this Agreement.

    c.   "BUNDLED PRODUCTS" means any combination of BEA and Distributor
         products approved by BEA in its sole discretion. Combinations may take
         any or all of the following forms: BEA and Distributor products sold
         under Distributor bill of materials which includes both BEA and
         Distributor products, inclusion of BEA sample products or demos on
         Distributor software distribution (CD-ROMS) where the customer's
         purchase of a BEA product results from use of sample product or demo,
         inclusion of BEA products in Digital SI services, or any other
         packaging activity which creates customer purchase of BEA products
         from Distributor.

    d.   "SUCCESSOR PRODUCTS" include products which are developed by BEA and
         which are based upon and adapted from the Former Digital Products such
         as a modification, supplement, or foreign language translation.
         Successor Products also include products that merge or combine a
         substantial part of Former Digital Products with other computer
         software or hardware and are intended to replace a Former Digital
         Product.

    e.   "DIGITAL CUSTOMERS" shall mean its channel partners and end user
         customers.

    f.   "DOCUMENTATION" means user manuals, reference manuals and installation
         guides, or portions thereof, which BEA provides with the BEA Products
         either in hard copy or electronic copy, as updated by BEA from time to
         time.

    g.   "EXPIRATION DATE" means the date identified as the expiration date in
         Exhibit A.

    h.   "FORMER DIGITAL PRODUCTS" means the DECmessageQ, Digital ObjectBroker,
         and OBB Desktop Connection products as described in the Middleware
         Acquisition and License Agreement between Distributor and BEA dated
         January 31, 1997.


                                         -2-

<PAGE>

    i.   "INTERNAL USE" means use for Digital's purposes which do not directly
         produce revenue for external customers. "Internal Use" does not
         include timesharing or any service bureau arrangement for its external
         customers.

    j.   "MARKS" means BEA's trademarks, trade names, service marks, service
         names, logos, insignias and other designations.

    k.   "DISTRIBUTOR PRODUCTS" means any Distributor products and/or services
         with which the BEA Products are bundled.

    l.   "TERRITORY" means the geographic region(s) set forth in Exhibit A.

2. PRODUCTS AND PRICES

    a.   APPOINTMENT. BEA appoints Distributor as a BEA Authorized Distributor.
         This appointment is non-exclusive, with BEA reserving the right to
         appoint other Distributors without restriction as to number and
         location. Subject to the terms and conditions of this Agreement, BEA
         grants Digital a non-exclusive, non-transferable license to market,
         sell and distribute BEA Products in the Territory to Digital
         Customers.

    b.   EMBEDDED AND BUNDLED PRODUCTS. BEA grants Distributor a non-exclusive,
         non-transferable license to market, sell and distribute BEA Products
         in the Territory as Bundled Products or as an embedded part of a
         Digital Product in which the following conditions are met:

         (i)     The APIs for the embedded BEA Products are not exposed or
                 available to the Digital Customers or customers of the
                 Distributor Product.

         (ii)    The BEA Products are delivered as a seamlessly integrated
                 component of the Distributor Product.

         (iii)   No separate installation or configuration of the BEA Products
                 is required or permitted.

         (iv)    Distributor contractually restricts all Digital Customers from
                 using the BEA Products except with the Distributor Product,
                 and makes commercially reasonable efforts to enforce that
                 restriction.

         (v)     Digital Customers of the Distributor Product will be unable to
                 build custom components of the Distributor Product using the
                 BEA Product components.

    c.   SEPARATE AGREEMENTS.  Distributor and BEA shall agree on a separate
         agreement covering NEC and Hitachi distribution of the Former Digital
         Products.


                                         -3-


<PAGE>

3.  PRODUCTS AND PRICES

    a.   ELIGIBLE PRODUCTS.  Distributor may market and embed the BEA
         Products specified in Exhibit A. BEA reserves the right at any time to
         make changes to any BEA Products, including without limitation,
         changes which are required (i) for security or (ii) to facilitate
         performance in accordance with specifications.

    b.   PRICING AND DISCOUNTS.  Distributor may acquire, embed and distribute
         the BEA Products under the Agreement at the prices listed in BEA's
         general price list, less the discount set forth in Exhibit A (or, as
         applicable, at the per unit price set forth in Exhibit A).  BEA agrees
         to keep the Former Digital Products available for a period of two (2)
         years from the date hereof and for one (1) year at prices no greater
         than 25% in excess of those set forth in Exhibit A. Thereafter, BEA
         reserves the right to (i) add BEA Products to, or drop BEA Products
         from, the general price list and Exhibit A, (ii) increase or decrease
         prices of the Former Digital Products on the general price list and/or
         (iii) to increase or decrease discounts or per unit prices.  Should
         BEA decide to discontinue a Former Digital Product, BEA will implement
         a process to its customer similar to Digital's end of life process.
         Price changes become effective upon thirty (30) days' prior written
         notice to Distributor. Orders requesting delivery after the effective
         date of a price increase will be charged at the increased price.
         Distributor agrees to waive the notice requirement in the event BEA
         decreases prices or increases discounts.

    c.   GUARANTEED MINIMUM PAYMENT. For each year of this Agreement,
         Distributor will pay BEA, as a non-refundable, guaranteed minimum
         payment, the amount of $1,500,000 within thirty days after the
         Effective Date or anniversary thereof.  The guaranteed minimum payment
         may only be recouped against software license fees owed by Distributor
         under this Agreement, and may not be recouped against any other fees,
         including without limitation referral fees or fees for professional
         services, engineering services, porting, maintenance and training.
         The guaranteed minimum payment may not be recouped against any amounts
         owed by Distributors as of the Effective Date. The guaranteed minimum
         payment must be recouped within one year of the Effective Date or
         anniversary thereof, or it will be forfeited. Such payment is
         understood to be part of, and not in addition to, the revenue
         guarantee in subsection d. below.

    d.   REVENUE GUARANTEE.  Distributor will guarantee revenue to BEA from
         sales hereunder a total of $8,000,000 the first year from the
         Effective Date and a total of $10,000,000 the following year.  BEA and
         Distributor will agree to guarantee levels for each quarter during the
         first two years from the Effective Date against which accounting for
         these guarantees will be done.  Within sixty (60) business days after
         the end of each quarter, Distributor will make payments to BEA to
         include any shortfall in the revenue guarantee for the quarter
         together with a report of product sold in such quarter and all other
         items of revenue taken into account in determining such shortfall. Any
         such shortfall payment will be taken as prepaid licenses for BEA
         Products to be distributed by Distributor under this Agreement, and
         Distributor shall have the right, within six months of the date of the
         payment, to upgrade the licenses to subsequent revisions or successor
         products of the BEA Products for which the licenses were prepaid. The
         calculation of these guaranteed revenue levels will take into account
         all of the BEA Products (as defined in Exhibit A) sold on computer

                                         -4-


<PAGE>

         platforms (other than sale of TUXEDO on non-Distributor platforms) as
         well as all sales of Former Digital Products, in each case whether
         sold by Distributor or sold by BEA as well as all BEA Products sold to
         third parties referred or introduced to BEA by Distributor and all
         service and support revenues relating to BEA Products sold hereunder
         or to such third parties. If BEA subsumes Former Digital Products or
         any of their functionality into other BEA offerings, BEA will either
         credit Distributor with a mutually agreed upon percentage of revenue
         from sales of such other BEA offerings, or renegotiate the level of
         the revenue guarantee for the affected period.

    e.   TAXES. Prices are exclusive of all applicable taxes. Distributor
         agrees to pay all taxes associated with Distributor's purchase,
         marketing, sublicensing and distribution of the BEA Products ordered
         under the Agreement, including but not limited to sales, use, excise,
         added value and similar taxes and all customs, duties or governmental
         impositions, but excluding taxes on BEA's net income. Any tax or duty
         BEA may be required to collect or pay upon the sale or delivery of the
         BEA Products to Distributor will be paid by Distributor, and such sums
         shall be due and payable to BEA upon delivery to Distributor. If
         Distributor claims a tax exemption, Distributor must provide BEA with
         valid tax exemption certificates.

    f.   PRODUCT UPGRADES.  Except as otherwise provided in Section 3d above,
         Distributor may upgrade any BEA Products acquired by Distributor under
         this Agreement in accordance with BEA's general product upgrade
         policies.  This upgrade right will expire on Expiration Date or on the
         date this Agreement is otherwise terminated as provided in Section 12.

    g.   PROTECTION.  BEA will establish and provide protection for supply and
         price for an identified list supplied by Digital within 90 days of the
         Effective Date of non-cancelable quotes, proposals, and other
         contracts.

4.  MARKETING, END USER SATISFACTION AND SUPPORT

    a.   USE OF AUTHORIZED DISTRIBUTOR TITLE.  Distributor may refer to itself,
         in connection with exercising its rights under this Agreement, as a
         "BEA Authorized Distributor."

    b.   JOINT MARKETING.

         -    Distributor and BEA will issue a joint press release within
              thirty (30) days after the Effective Date or as mutually agreed.

         -    Upon BEA's request, Distributor will provide BEA with a list of
              Distributor customers (which will be Distributor's Confidential
              Information), which list may be used by BEA only to promote BEA
              Products, and for no other purpose. Distributor will also assist
              BEA in mailings, at BEA's expense, to the Distributor customer
              base to promote BEA TUXEDO.


                                         -5-

<PAGE>

         -    Distributor will allow BEA to participate in Distributor's user
              group meetings as Distributor determines appropriate.  BEA may
              advertise and promote the Distributor Product in BEA marketing
              and sales programs.

         -    Distributor will, as Distributor deems appropriate, participate
              in BEA's business development and lead generation programs, logo
              and trademark usage branding campaign, and WEB marketing program,
              including hotlinks.

         -    As appropriate and reasonable, Distributor may be invited to
              participate in seminar programs, trade shows, sales teaming,
              corporate visits, executive forums, event planning, developer
              camps, monthly program review meetings, an advisory council,
              partnership catalog, CD-ROM marketing, beta testing and demos.
              BEA will make available to Distributor a reasonable number of
              copies of demo software free of charge for such purpose.

         -    TUXEDO Ambassadors Program; BEA and Distributor will establish a
              TUXEDO Ambassador's Program for select Distributor personnel,
              including no charge training at the BEA training facilities in
              the United States and direct access by Distributor consultants to
              key BEA support personnel.  Distributor's TUXEDO Ambassadors will
              be responsible for providing support to other Distributor
              personnel in sales and sales support on a world-wide basis.
              Estimated that 20 slots per year in the BEA's training course
              will be required.  Distributor will also make available to BEA
              personnel 20 slots per year in Digital training courses.

    c.   PREMIER MARKETING AGREEMENTS

         -    BEA will ensure that the Distributor platforms (Digital, UNIX,
              OPEN VMS and WIN NT) are related in a way which is at least equal
              to any other platform.  To this end, BEA commits that:

              -    BEA will prominently display Distributor platforms in
                   conjunction with BEA's porting center, trade shows and other
                   events requiring the demonstration of software.

              -    BEA will prominently have a dedicated team which will focus
                   on Distributor for business, marketing and sales, and
                   technical issues.

              -    BEA will provide education for Distributor engineering, sales
                   and marketing.

              -    Distributor will provide BEA reasonable technical assistance
                   in support of port, tuning and optimization of BEA Products 
                   on Open VMS platform.

         -    Providing there are no Distributor technical limitations that
              inhibit BEA's efforts or ability to provide:


                                         -6-

<PAGE>

              -    All Middleware features which are intended for general
                   commercial availability will be available on the Distributor
                   platform at the same time as (or before) these features are
                   available on any other platform;

              -    No new feature intended for general commercial availability
                   will be available to any other platform before availability
                   on the Distributor platform; and

              -    No differential performance advantage for the Former Digital
                   Products will be available to any other platform (middleware
                   will perform on Digital UNIX at a level vs. other platforms
                   consistent with the relative performance of Distributor
                   hardware).

         -    It is understood by both parties that in order to maintain such
              tier one status Distributor will provide:

              -    Timely access to new hardware and operating systems releases

              -    Continuing education for BEA engineering, support, sales and
                   marketing as deemed appropriate by Distributor to help
                   differentiate the Distributor offering

              -    Distributor will make engineering and field level resources
                   available to support the products

         -    By mutual agreement, Distributor and BEA will engage in joint
              projects to differentiate the products on the Distributor
              platform (e.g., 64-BIT Computing Clustering).  Projects to
              differentiate the Distributor Platform where billable
              consultation from BEA is required will be supported by BEA at
              preferred partner discounted consulting rates.

         -    By mutual consent, Distributor and BEA may bundle BEA products
              either software of hardware.  In these cases, Distributor will
              ship BEA product under the Distributor logo, BEA logo or
              combination of both logos, and additional discounts may apply.

    d.   USE OF BEA MARKS.

         (i)  During the term of this Agreement, Distributor shall use, and is
              hereby granted a non-transferable, non-exclusive and restricted
              license (with no right to sublicense, except as expressly
              provided herein) to use, the marks applicable to BEA Products
              acquired under this Agreement in connection with any advertising,
              packaging, marketing, technical or other materials related to
              Distributor's marketing and distribution of the Bundled Products
              and the Distributor Products.  Such use by Distributor shall be
              in accordance with BEA's then current trademark usage policies as
              provided, and updated from time to time, by BEA.  All such usage
              shall


                                         -7-

<PAGE>

<PAGE>

         inure to BEA's benefit. Upon Expiration Date or termination of the 
         Agreement, Distributor agrees to cease all display, advertising and 
         use of any and all Marks.

    (ii) Distributor acknowledges BEA's ownership of and title to all rights 
         in the Marks and the goodwill attaching to the Marks. Distributor 
         agrees not to contest the Marks, or make application for 
         registration of any Marks without BEA's express prior written 
         consent. Distributor agrees not to alter, remove or obscure any 
         proprietary notice provided by BEA, and Distributor agrees not to 
         attach any additional Marks without the prior written consent of BEA 
         or affix any Marks to any non-BEA product. Distributor agrees not to 
         use, employ or attempt to register any trademarks or trade names 
         which are confusingly similar to Marks.

  e. DIGITAL CUSTOMER SATISFACTION. The BEA Products marketed and distributed 
     by Distributor under this Agreement are technically complex and require 
     high-quality, individualized pre-sale and post-sale support. This 
     support is necessary to achieve and maintain high Digital Customer 
     satisfaction. Although BEA has granted Distributor a license to market 
     and sell BEA Products in the Territory under the terms of this 
     Agreement, Distributor agrees that it will not market and sell BEA 
     Products in areas where it does not have the ability to support 
     adequately the BEA Products. In addition, in order to help ensure high 
     Digital Customer satisfaction, Distributor agrees to:

    - Use commercially reasonable efforts to report to BEA promptly and in 
      writing all suspected and actual problems with any BEA Product;

    - Maintain a shipment report identifying the Digital Customer, the BEA 
      Product sold, the date of sale, and each BEA Product's serial number;

    - Retain all shipment reports for three (3) years after the date of sale, 
      and assist BEA, upon request, in tracing a product to a Digital 
      Customer, in order to distribute critical product information, locate a 
      BEA Product for safety reasons, or discover unauthorized marketing or 
      infringing acts;

    - Refrain from making any representations, warranties or guarantees to 
      customers with respect to the specifications, features or capabilities 
      of the BEA Products that are inconsistent with the literature 
      distributed by BEA; and

    - Distribute by Digital's standard distribution methods. 

  f. COMPLIANCE BY DIGITAL CUSTOMERS. Software acquired under this Agreement 
     is made available to Distributor to market only under the provisions of 
     this Agreement. When marketing, Distributor agrees to exercise 
     commercially reasonable efforts to ensure that each Digital Customer 
     receiving the software through Distributor understands, and agrees to be 
     bound by, the applicable Digital software license agreement ("Software 
     License Agreement"). For purposes of the Agreement, "software" includes 
     firmware and software stored in ROMs. In addition, Distributor agrees to 
     be bound by the applicable BEA

                                  -8-
<PAGE>

     Software License Agreement with respect to all software put to Internet 
     Use by Distributor, except for Former Digital Products currently in use.

  g. CONFLICT OF INTEREST. Consistent with promoting BEA Products as the 
     premier middleware solution for open systems, Distributor shall be free 
     to promote the products of other companies unless it has received 
     documentation which in Distributor's sole determination establishes that 
     such promotion would unreasonably prejudice BEA's business interests.

  h. INDEMNIFICATION. Distributor agrees to indemnify, hold harmless and, at 
     BEA's request, defend BEA and its suppliers from and against any and all 
     claims, liabilities, losses, damages, expenses and costs (including 
     attorney's fees and costs) resulting from any claim made against BEA by 
     a Digital Customer relating to BEA Products or Distributor Products 
     acquired from Distributor unless such claim results from BEA's own 
     negligence.

5. PLACING ORDERS AND TERMS OF PAYMENT

 5.1 With respect to non-Former Digital Products only or Former Digital 
Products designated by Distributor:

  a. CREDIT AND PAYMENT TERMS. Distributor agrees to pay all invoices 
     promptly within thirty (30) days after receipt of BEA's invoice. 
     Invoices not paid when due will accrue interest on an annual/a monthly 
     basis from the date due until paid in full at a rate of one percent (1%) 
     per month on any outstanding balance or the maximum legal rate allowed 
     by law, whichever is less.

  b. ACCEPTANCE OF ORDERS. All orders will be subject to acceptance in 
     writing by BEA at its principal place(s) of business and will not be 
     binding until the earlier of acceptance or shipment. Orders requesting 
     shipment  more than ninety (90) days from the date of the order will not 
     be subject to acceptance by BEA and will be null and void. Should orders 
     for BEA Products exceed BEA's available inventory, BEA may, unless 
     Distributor has specifically indicated otherwise in its purchase order, 
     accommodate Distributor's offer by allocating available inventory and 
     making shipments on a basis BEA deems equitable, without liability to 
     BEA on account of the method of allocation chosen or its implementation. 
     Orders not filled or completely filled by BEA within ninety (90) days of 
     the date of the orders will be deemed to have lapsed and will be removed 
     from BEA's order entry system to the extent not filled, but revenues 
     which such orders would have generated to BEA shall be credited in full 
     against the revenue guarantee in Section 3.d. above.

  c. CANCELLATION OF ORDERS. Orders accepted by BEA may be canceled without 
     penalty by giving written notice of cancellation to BEA at least fifteen 
     (15) days prior to the scheduled shipment date. Orders canceled less 
     than fifteen (15) days prior to the scheduled shipment dated may be 
     subject to a cancellation payment of fifteen percent (15%) of the 
     invoice value of the canceled order. In no event may Distributor cancel 
     any order or any portion of an order after shipment.

                                  -9-
<PAGE>

  d. PRODUCT AVAILABILITY AND SHIPPING DESIGNATIONS. BEA will use 
     commercially reasonable efforts to fill Distributor's orders for BEA 
     Products and meet Distributor's request for shipment dates subject to 
     product availability and consistent with BEA production and supply 
     schedules, but BEA will not be liable for any damages to Distributor or 
     to any third party for BEA's failure to fill any orders for any delay in 
     delivery or error in filling any orders for any reason whatsoever, 
     provided that the revenue which would have been generated from any 
     products which are ordered and not shipped shall be credited in full 
     against the revenue guarantee in Section 3.d above. Distributor may 
     designate up to three (3) "bill to" addresses and up to five (5) ship 
     to" addresses for shipments under the Agreement. BEA will ship BEA 
     Products and bill Distributor to Distributor's designated "ship to" and 
     "bill to" locations. Distributor may change the "ship to" location at 
     any time prior to the estimated shipment date; however, BEA may not be 
     able to honor a notice, unless it is in writing and received at least 
     fifteen (15) days prior to the estimated shipment date.

  e. NO OBLIGATION TO SHIP IN EVENT OF BREACH. Even in case where BEA accepts 
     a purchase order, BEA will not be obligated to ship BEA Products if 
     Distributor is more than sixty (60) days in arrears on payments owing to 
     BEA Products or if Distributor is otherwise in material breach of this 
     Agreement at the time of the scheduled shipment, provided that the 
     revenue which would have been generated from any products which are 
     ordered and not shipped shall be credited in full against the revenue 
     guarantee in Section 3.d. above.

  f. DELIVERY. Delivery in the United States and Canada will be made F.O.B. 
     BEA's facility, BEA's carrier, ground only. All other freight 
     arrangements will be prepaid and billed to Distributor. For delivery 
     outside the United States and Canada, BEA will select a carrier to 
     transport BEA Products to the "ship to" point(s) designated by 
     Distributor pursuant to Section 5(b), will prepay insurance and freight, 
     and will add the cost of insurance and freight, and will add the cost of 
     insurance and freight to Distributor's invoice.

  g. TITLE AND RISK OF LOSS. Title to the tangible media of the BEA Products 
     (exclusive of the right retained by BEA in any Marks, patents, 
     copyrights, trade secrets and any other intellectual property) and all 
     risk of loss will pass to Distributor upon delivery at BEA's designated 
     shipping facility or the common carrier selected by BEA.

 5.2 With respect to the Former Digital Products the following will apply 
unless otherwise designated by Distributor:

  a. BEA will supply to Distributor a reasonable number of copies of the 
     software masters free of charge. The masters will be delivered 14 days 
     in advance of BEA's FCS date or as soon as available with the goal of 
     BEA and Distributor achieving a simultaneous first customer ship. The 
     software masters will be sent automatically to Distributor, not 
     requiring a purchase order.

  b. BEA will supply software binaries to Distributor via a gold master on 
     industry standard media types. BEA will also provide the appropriate 
     software tools/documentation (if



                                     -10-

<PAGE>

     owned by BEA) required to replicate such Former Digital Products either 
     physically or on-line.

  c. BEA will supply software documentation masters to Distributor either 
     electronically or on physical industry standard media. BEA will use 
     commercially reasonable efforts to provide masters which conform to the 
     industry standard.

  d. Distributor will use materials of its choice when replicating 
     documentation provided such materials meet industry standards. Distributor
     will not alter any trademarks, copyright notices or the content of the kits
     and will utilize security standards to safeguard the distribution of the
     Former Digital products comparable to those employed for its own software
     products.


6. PROPRIETARY RIGHTS

  a. PROPRIETARY RIGHTS. Notwithstanding any provision of this Agreement to 
     the contrary, BEA (or the licensor through which BEA obtained the rights
     to distribute the BEA Products) exclusively owns and retains all right,
     title, interest in and to, and ownership of, all intellectual property
     rights in the BEA Products (any copies and portions thereof), whether
     in machine readable or printed form, including, without limitation, 
     (i) all software, firmware, documentation and related materials which 
     are acquired from, produced by or shipped by BEA under this Agreement,
     (ii) all modifications to, and derivative works, compilations or
     collective works of, the BEA Products made by Distributor, BEA or any
     third party, and (iii) all related technical know-how and all rights
     therein (including without limitation, rights in patents, copyrights,
     and trade secrets applicable thereto). BEA does not transfer any
     portion of such title and ownership, or any of the associated goodwill, 
     to Distributor, and this Agreement should not be construed to grant
     Distributor any right or license, whether by implication, estoppel or
     otherwise, except as expressly provided herein. Distributor agrees to be 
     bound by and observe the proprietary nature of the BEA Products acquired 
     this Agreement. Distributor agrees to take reasonable measures to avoid 
     action which would jeopardize, limit or interfere in any manner with 
     BEA's (or its licensors") ownership of and rights with respect to the BEA 
     Products and Documentation. Except as set forth in this Agreement, or as 
     may be permitted in writing by BEA,, Distributor agrees not to provide BEA
     Products or any part or copies there to any third party without the prior 
     written consent of BEA. The provisions of the paragraph shall not apply to
     the Former Distributor Products or any Derivative Product thereof until 
     BEA has discharged in full all of its obligations under the Promissory 
     Note (the "Note") of even date in the principal amount of $20 million 
     payable to Distributor.

  b. PROPRIETARY NOTICES. Neither Distributor nor any of its employees or
     agents shall remove or alter any trademark, trade name, copyright, or
     other proprietary notices, legends, symbols, or labels appearing on or
     in copies of the BEA Products and Documentation delivered to Distributor
     by BEA.

  c. PRODUCT RESTRICTION TAMPERING. Except to the extent permitted by 
     applicable law despite this restriction, Distributor agrees not to copy, 
     modify, translate, decompile, disassemble,

                                   -11-

<PAGE>

     or otherwise reverse engineer, or otherwise determine or attempt to
     determine source code or protocols from, the executable coded of the BEA
     Products and Documentation, and agrees not to permit or authorize anyone
     else to do so. Distributor also agrees that any such works are 
     derivative works and as such are the sole and exclusive property of BEA or
     its licensor.

7. CONFIDENTIAL INFORMATION

  a. CONFIDENTIAL INFORMATION. For purposes of this Agreement "Confidential 
     Information" shall mean information including, without limitation, 
     computer programs, code, algorithms, names and expertise of employees
     and consultants, know-how, formulas, processes, ideas, inventions, 
     (whether patentable or not), schematics and other technical, business,
     financial and product development plans, customer lists, information
     regarding distribution channels, forecasts, and strategies, whether or
     not such times are marked "Confidential", but if disclosed orally,
     identified as confidential and reduced to writing within thirty (30) days
     after such oral disclosure.

  b. RESTRICTIONS ON DISCLOSURE AND USE. Each party agrees to maintain all
     Confidential Information in confidence to the same extent that it
     protects its own similar confidential and to use such Confidential
     Information only as permitted under this Agreement. Each party agrees to
     take all reasonable precautions to prevent any unauthorized disclosure or
     use of Confidential Information including, without limitation, disclosing
     Confidential Information only to its employees, independent contractors,
     consultants, and legal and financial advisors (i) with a need to know
     further permitted uses of such information, (ii) who are parties to
     appropriate agreements sufficient to comply with this Section 7, and
     (iii) who are informed to the nondisclosure/non-use obligations imposed
     by this Section 7 and both parties shall take appropriate steps to
     implement and enforce such non-disclosure/non-use obligations.

  c. EXCLUSIONS. The foregoing restrictions on disclosure and use shall 
     survive for five (5) years following termination of this Agreement but
     shall not apply with respect to any Confidential Information which:
     (i) was or becomes publicly known through no fault of the receiving
     party; (ii) was rightfully known or becomes rightfully known to the
     receiving party without confidential or proprietary restriction from a 
     source other than the disclosing party, (iii) is independently developed by
     the receiving party without the participation of individuals who have had
     access to the Confidential Information; (iv) is approved by the 
     disclosing party for disclosure without restriction in a written document
     which is signed by a duly authorized officer of such disclosing party; or
     (v) the receiving party is legally compelled to disclose; provided, 
     however, that prior to any such compelled disclosure, the receiving party
     will (A) assert the privileged and confidential nature of the 
     Confidential Information against the third party seeking disclosure and
     (B) cooperate fully with the disclosing party in protecting against any
     such disclosure and/or obtaining a protective order narrowing the scope 
     of such disclosure and/or use of the Confidential Information, but only 
     as and to the extent necessary to legally comply with such compelled 
     disclosure.

                                   -12-
<PAGE>

8. WARRANTIES

  a. LIMITED WARRANTY. Subject to the limitations set forth in this Agreement,
     BEA warrants only to Distributor that the BEA Products when properly
     adapted, installed, and used will conform to the functional 
     specifications set forth in the Documentation in effect when the BEA 
     Products are shipped by BEA to Distributor. All warranty claims will be 
     made with the time period of ninety (90) days ("Warranty Period") from 
     the date Distributor first ships each version of a BEA Product to Digital
     Customers. All warranty claims not made within the time period specified 
     above shall deemed waived. BEA's warranty and obligation is solely for the 
     benefit of Distributor who has no authority to extend this warranty to any
     other person or entity. BEA MAKES NO WARRANTY THAT ALL ERRORS OR FAILURES
     WILL BE CORRECTED.

  b. EXCLUSIVE WARRANTY. THE EXPRESS WARRANTY SET FORTH IN SECTION 8(a) 
     CONSTITUTES THE ONLY WARRANTY WITH RESPECT TO THE BEA PRODUCTS AND 
     DOCUMENTATION. BEA MAKES NO OTHER REPRESENTATION OR WARRANTY OR 
     CONDITION OF ANY KIND WHETHER EXPRESS OR IMPLIED (EITHER IN FACT OR BY
     OPERATION OF LAW) WITH RESPECT TO THE BEA PRODUCTS OR DOCUMENTATION.
     BEA EXPRESSLY DISCLAIMS ALL WARRANTIES OR CONDITIONS OF MERCHANTABILITY 
     OR FITNESS FOR A PARTICULAR PURPOSE. BEA DOES NOT WARRANT THAT THE BEA
     PRODUCTS OR DOCUMENTATION ARE ERROR-FREE OR THAT OPERATION OF THE BEA
     PRODUCTS WILL BE SECURE OR UNINTERRUPTED AND HEREBY DISCLAIMS ANY AND ALL
     LIABILITY ON ACCOUNT THEREOF. THERE IS ALSO NO IMPLIED WARRANTY OF
     NON-INFRINGEMENT. THE SOLE REMEDY FOR INFRINGEMENT IS PROVIDED IN
     SECTION 9. This subsection shall be enforceable to the extent allowed by
     applicable law.

  c. EXCLUSIONS FROM WARRANTIES. BEA does not warrant BEA products which are
     not manufactured by BEA. Such products are provided by BEA on an "as is"
     basis. Any warranty service for such non-BEA products will be provided by
     the manufacturer of such non-BEA products in accordance with the 
     applicable manufacturer's warranty. In addition, BEA shall have no 
     obligations under the warranty provisions set forth in Section 8(a) if
     any nonconformance is caused by: (a) the incorporation, attachment or
     other engagement of any attachment, feature, program, or device, other
     than by BEA, to the BEA Products, or any part thereof; or (b) accident,
     transportation, neglect or misuse, alteration, modification or
     enhancement of the BEA Products other than by BEA; use of supplies or
     materials not meeting specifications; use of the BEA Products for other
     than the specific purpose of which the BEA Products are designed; use of
     the BEA Products on any systems other than the specified hardware 
     platform for such BEA Products; Distributor's use of defective media
     (other than defective media provided by BEA to Distributor) or 
     Distributor's failure to incorporate any update previously released by BEA
     which corrects such nonconformance.

  d. REMEDY. In the event that Distributor finds errors in or a failure of the
     BEA Products that prevents the BEA Products from substantially conforming
     to the functional specifications set forth in the Documentation in 
     effect when the BEA Products are shipped by BEA to

                                   -13-

<PAGE>

     Distributor, and notifies BEA during the Warranty Period, BEA will 
     correct promptly, at no charge to Distributor, any such errors or failures
     or will replace such defective BEA Products with comparable BEA Products.

9. INDEMNIFICATION

  a. INDEMNIFICATION. BEA shall defend any action, claim or demand brought
     against Distributor to the extent it is based on a claim that 
     distribution by Distributor of the BEA Products furnished hereunder 
     infringes any valid United States patent as of the Effective Date, United
     States copyright, United States trademark, or trade secret in the United 
     States (collectively, "Claims"). BEA will pay resulting costs, damages 
     and legal fees finally awarded against Distributor in such action which 
     are attributable to such Claims provided that Distributor (a) promptly 
     (within (20) days) notifies BEA in writing of any such Claim and BEA has 
     sole control of the defense and all related settlement negotiations, 
     and (b) reasonably cooperates with BEA in defending or settling such claim.

  b. ACTUAL OR POTENTIAL PRODUCT INFRINGEMENT. Should a BEA Product (or the
     operation of the BEA Product) become, or in BEA's opinion be likely to
     become, the subject of infringement of any patent, copyright, trademark,
     trade secret or any other third-party right, Distributor agrees to permit
     BEA, at its option and expense, to procure for Distributor the right to
     continue using the BEA Products, to replace or modify them so that they
     become non-infringing, or if neither of the above commercially 
     reasonable, to remove the BEA Product from the list of BEA Products which
     Distributor is authorized to distribute under this Agreement provided,
     however, that in such event an appropriate adjustment will be made to the
     revenue guarantee set forth in Section 3d. above.

  c. DISCLAIMER. THIS SECTION 9 STATES THE ENTIRE LIABILITY OF BEA, AND
     TOGETHER WITH DISTRIBUTOR'S TERMINATION RIGHTS ARISING UNDER THIS
     AGREEMENT, THE EXCLUSIVE REMEDY WITH RESPECT TO INFRINGEMENT OF PATENTS,
     COPYRIGHTS, TRADEMARKS OR ANY OTHER INTELLECTUAL PROPERTY RIGHTS, WHETHER
     UNDER THEORY OR WARRANTY, INDEMNITY OR OTHERWISE.

10. LIMITATION OF LIABILITY

  a. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT (UNLESS
     OTHERWISE REQUIRED BY APPLICABLE LAW), NEITHER DISTRIBUTOR OR BEA
     WILL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL 
     DAMAGES (INCLUDING LOST PROFITS) SUSTAINED OR INCURRED IN CONNECTION
     WITH THIS AGREEMENT AND THE BEA PRODUCTS THAT ARE SUBJECT TO THIS 
     AGREEMENT REGARDLESS OF THE FORM OF ACTION OR LEGAL OR EQUITABLE THEORY
     AND WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE.

  b. NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY
     OR INVALIDITY OF THIS SECTION 10, THE TOTAL

                                   -14-
<PAGE>

     LIABILITY OF BEA OR ITS SUPPLIERS, REGARDLESS OF THE FORM OF ACTION, 
     SHALL NOT EXCEED THE GREATER OF (1) $100,000 OR (2) THE PRICE, LESS ANY 
     APPLICABLE DISCOUNT, OF THE BEA PRODUCT THAT CAUSED THE DAMAGES OR GAVE 
     RISE TO THE CAUSE OF ACTION. THIS LIMITATION SHALL NOT APPLY TO BEA'S 
     LIABILITY UNDER SECTION 9.


11. TERM

     The term of this Agreement, unless terminated earlier as provided in the
     Agreement, will commence on the Effective Date and will automatically
     expire on the Expiration Date. The acceptance of any purchase order by
     BEA after the Expiration Date will be construed as extending this
     Agreement on a month-to-month basis, with the month-to-month Agreement
     subject to termination at any time by either party upon thirty (30) days'
     prior written notice. Nothing contained in this Agreement should be
     interpreted as requiring either BEA or Distributor or Distributor to
     renew or extend this Agreement.

12. TERMINATION

  a. TERMINATION FOR CAUSE. Either party may terminate this Agreement for the
     breach by other party of a material term of this Agreement, provided that
     then non-breaching party will first give the other party written notice 
     of the breach and a reasonable period of a least thirty (30) days in
     which to cure the alleged breach. If a cure is not achieved during the 
     cure period, then the non-breaching party may terminate this Agreement
     upon written notice. Notwithstanding the foregoing, BEA shall have the
     right to terminate this Agreement immediately if Distributor materially
     breaches Sections 2(a), 4(d), 6(c) or 7. Distributor may terminate this
     Agreement immediately upon an Event of Default under the Note.

  b. BANKRUPTCY. Either party may terminate this Agreement upon written notice
     to the other party if the other party (i) is not paying its debts as
     such debts generally become due, (ii) becomes insolvent, (iii) files or 
     has filed against it a petition (or other document), under any Bankruptcy 
     Law or similar law, which is unresolved within dissolution, liquidate, 
     composition, financial reorganization or recapitalization with creditors,
     (v) makes a general assignment or trust mortgage for the benefit of
     creditors, or (vi) if a receiver, trustee, custodian or similar agent is
     appointed or takes possession of any of its property or business.

  c. EFFECT ON RIGHTS.

     (i)  Termination of this Agreement by either party shall not act as a
          waiver of any breach of this Agreement and shall not act as a release
          of either party from any liability for breach of such party's 
          obligations under this Agreement.

     (ii) Except as specified in Section 12(e)(ii), upon termination or 
          expiration of this Agreement, all licenses for BEA Products and
          Documentation granted under

                                   -15-


<PAGE>

           this Agreement shall terminate and the revenue guarantee in 
           Section 3.c. above shall terminate.

     (iii) Except where otherwise specified, the rights and remedies granted 
           to a party under this Agreement are cumulative and in addition to, 
           and not in lieu of, any other rights or remedies which the party 
           may possess at law or in equity including without limitation 
           rights or remedies under applicable patent, copyright, trade 
           secrets, or proprietary rights laws, rules or regulations.

  d. EFFECTS OF TERMINATION.

     (i)   Within thirty (30) calendar days after termination of this 
           Agreement, Distributor shall either deliver to BEA or destroy all 
           copies of the BEA Products and Documentation (except as provided 
           in Section 12(e)(ii) and any other materials provided by BEA to 
           Distributor hereunder in its possession or under its control, and 
           shall furnish to BEA an affidavit signed by an officer of 
           Distributor certifying that, to the best of its knowledge, such 
           delivery or destruction has been fully effected.

     (ii)  Notwithstanding Section 12(e)(i) and provided that this Agreement 
           is not terminated by BEA pursuant to Section 12(a) or 12(b) and 
           that Distributor fulfills its obligations specified in this 
           Agreement with respect to such items, Distributor may continue to 
           use and retain a limited number of copies of the BEA Products and 
           Documentation to the extent, but only to the extent, necessary to 
           support BEA Products rightfully distributed to Digital Customers 
           by Distributor prior to termination of this Agreements.

  e. CONTINUING OBLIGATIONS.

     (i)   PAYMENT OF ACCRUED FEES. Within thirty (30) calendar days of 
           termination of this Agreement, Distributor shall pay to BEA all 
           sums then due and owing.

     (ii)  CONTINUANCE OF SUBLICENSES. Notwithstanding the termination of 
           this Agreement, all, all End User sublicenses which have been 
           properly granted by Distributor pursuant to this Agreement prior 
           to its termination shall survive. Distributor shall cooperate with 
           BEA to allow BEA to take over all Distributor accounts that may 
           wish to continue to obtain BEA Products.

     (iii) OTHER CONTINUING OBLIGATIONS. The respective rights and 
           obligations of BEA and Distributor under the provisions of 
           Sections 4(d)(ii), 4(h), 5.1(a), 5.1(d), 6, 7, 8, 9, 10, 12(c), 
           12(d), 12(e)(iii) and 13 shall survive any termination of this 
           Agreement.

                                  -16-
<PAGE>

13. GENERAL PROVISIONS

    a.   FORCE MAJEURE. If either party is prevented from performing any 
         portion of the Agreement (except the payment of money) by caused 
         beyond its control, including, without limitation, labor disputes, 
         civil commotion, war, governmental regulations or controls, 
         casualty, inability to obtain materials or services or acts of God, 
         such defaulting party will be excused from performance for the 
         period of the delay and for a reasonable time thereafter.

    b.   GOVERNING LAW. This Agreement is entered into in the U.S.A., and 
         this Agreement shall be governed by and construed in accordance with 
         the laws of the State of California, U.S.A., without reference to 
         its conflicts of law provisions.

    c.   WAIVER AND AMENDMENT. The waiver by either party of a breach of or a 
         default under any provision of this Agreement, shall not be 
         construed as a waiver of any subsequent breach of the same or any 
         other provision of the Agreement, nor shall any delay or omission on 
         the part of either party to exercise or avail itself of any right or 
         remedy that it has or may have hereunder operate as a waiver of any 
         right or remedy. No amendment or modification of any provision of 
         this Agreement shall be effective unless in writing and signed by a 
         duly authorized signatory of BEA and Distributor.

    d.   ASSIGNMENT. The Agreement is not assignable by either party nor are 
         the obligations imposed on either delegable, in whole or in part, 
         without the other party's prior written consent other than to a 
         parent, subsidiary or affiliate. Any attempt to assign, sublicense 
         (except as expressly permitted herein) or transfer any of the 
         rights, duties or obligations under this Agreement in derogation 
         hereof without the other party's written consent will be null and 
         void.

    e.   ATTORNEY'S FEES. Each party agrees to pay the other's reasonable 
         attorneys' fees and costs of litigation if the original party, for 
         any cause whatsoever, brings suit against the other party and the 
         other party is finally adjudicated not to have liability.

    f.   NOTICE. Unless otherwise agreed to by the parties, all notices 
         required under this Agreement will be deemed effective when received 
         and made in writing by either (i) registered mail or certified mail, 
         return receipt (ii) overnight mail or express courier, in each case 
         addressed and set to the address indicated on the Cover Sheet and to 
         the attention of the party executing the Agreement or that person's 
         successor, or (iii) by telephone facsimile transfer appropriately 
         directed to the attention of the party executing the Agreement or 
         the person's successor. Quarterly reports and payments under 
         Section 3d. shall be sent to BEA Attn: Chief Financial Officer. 
         Copies of notices to Distributor shall also be sent to the attention 
         of Eric Thorp, Esq., 111 Powdermill Road, Maynard, MA 01754.

    g.   SEVERABILITY. If the application of any provision or provisions of 
         this Agreement to any particular facts or circumstances shall be 
         held to be invalid or unenforceable by any court of competent 
         jurisdiction, then (a) the validity and enforceability of such

                                  -17-
<PAGE>

         provision or provisions as applied to any other particular facts or 
         circumstances and the validity of other provisions of this Agreement 
         shall not in any way be affected or impaired thereby and (b) such 
         provision or provisions shall be reformed without further action by 
         the parties hereto to and only to the extent necessary to make such 
         provision or provisions valid and enforceable when applied to such 
         particular facts and circumstance.

    h.   RELATIONSHIP OF THE PARTIES. No agency, partnership, joint venture, 
         or employment is created as a result of this Agreement, and neither 
         Distributor nor its agents have any authority of any kind to bind 
         BEA in any respect whatsoever. Each party acknowledges that the 
         parties to this Agreement are independent contractors and that it 
         will not, except in accordance with the Agreement, represent itself 
         as an agent or legal representative of the other.

    i.   COMPLIANCE WITH LAWS. Before Distributor places any orders under 
         this Agreement, each party will comply, at its own expense, with all 
         statutes, regulations, rules, ordinances, and orders of any 
         governmental body, department or agency which apply to or result 
         from such party's obligations under this Agreement. Distributor 
         agrees to not export BEA Products, directly or indirectly or 
         indirectly, separately or as part of system, without first obtaining 
         proper authority to do so from the appropriate governmental agencies 
         or entities, as may be required by law. In particular, Distributor 
         assures BEA that, absent any required prior authorization from the 
         Office of Export Licensing, U.S. Department of Commerce, Distributor 
         will not export or re-export (as defined in Section 779 of the 
         Export Administration Regulations, as amended ("Regulations")) the 
         BEA Products, any technical data or other confidential information, 
         or direct product of any of the foregoing, to any Group Q, S, W, Y 
         or Z country specified in Supplement No. 1 to Section 770 of the 
         Regulations or each other countries as come under restriction by 
         action of the United States Government authorities. The countries 
         subject to restriction by action of the United States government are 
         subject to change, and it is Distributor's responsibility to comply 
         with the United States Government requirements as they may be 
         amended from time to time.

    j.   GOVERNMENT RIGHTS. Distributor agrees to (I) identify the BEA 
         Products in all proposals and agreement with the United States 
         Government or any contractor for the United States Government, and 
         (ii) identify or mark the software products provided pursuant to any 
         agreement with the United States Government or any contractor for 
         equivalent to that afforded commercial computer software and related 
         documentation developed at private expense and provided with 
         Restricted Rights as defined in DOD FAR Supplement 48 C.F.R. 
         252.227-7013(c)(1)(ii) in effect as of May 18, 1987 or any successor 
         regulation.

    k.   RECORDS EXAMINATIONS. Each party agrees to allow the other to 
         examine its records to determine compliance or noncompliance with 
         the Agreement. Any examination will be at the expense of the 
         examining party and will be solely for the purpose of ensuring 
         compliance with the Agreement. Any examination will be conducted 
         only by an authorized representative of the examining party, and 
         will occur during regular

                                  -18-
<PAGE>

         business hours at the other party's offices and will not interfere 
         unreasonably with the other party's business activities. 
         Examinations will be made no more frequently than quarterly, and the 
         examining party will give the other party ten (10) days or more 
         prior written notice of the date of the examination of the name of 
         the authorized representative who will be conducting the 
         examination. All information obtained by the authorized 
         representative conducting the audit will be maintained confidential 
         by the representative. The examiner will give Distributor and BEA an 
         examination report containing only the information necessary to 
         indicate compliance or non-compliance with the Agreement. If the 
         examiner determines that a party is not in material compliance with 
         this Agreement, such party shall promptly remedy any such 
         non-compliance and will bear the expenses of the audit.

    l.   EXHIBITS. The Exhibits to this Agreement are incorporated therein by 
         this reference.

    m.   ENTIRE AGREEMENT. This Agreement, including the Exhibits attached 
         hereto, constitutes the entire agreement between the parties 
         concerning the subject matter hereof and supersedes all prior or 
         contemporaneous proposals or agreements whether oral or written, and 
         all communications between the parties relating to the subject 
         matter of this Agreement and all past course of dealing or industry 
         custom. In particular, this Agreement supersedes and replaces any 
         other TUXEDO distribution agreements that Distributor may have 
         entered into with any party. Unless otherwise expressly agreed in 
         writing by the parties, the terms and conditions of this Agreement 
         shall prevail, notwithstanding any variance with any purchase order 
         or other written instrument submitted by Distributor, whether or not 
         formally rejected by BEA. This Agreement will not be supplemented or 
         modified by any course of dealing in usage of trade.

                                  -19-
<PAGE>


                                       EXHIBIT A

                               BEA PRODUCTS AND DISCOUNTS


Expiration Date:   Three Years from the Effective Date

Territory:         Worldwide


Eligible BEA Products:

         1.    Former Digital Products

         2.    BEA TUXEDO

         3.    Successor Products

Discount:

         1.    [***]

         2.    [***]

         3.    The above discounts will not apply in any case where 
               government flowdowns are required. The discount in each such 
               case will be negotiated with Distributor on a case-by-case 
               basis.

         4.    The prices in effect at the commencement of this Agreement for 
               Former Digital Products are based upon Distributor's price 
               list and for BEA TUXEDO upon BEA's price list.

                                  -20-

<PAGE>

                             EXHIBIT III

                             BILL OF SALE

     This Bill of Sale, dated as of the 31st day of January, 1997, is 
executed and delivered by Digital Equipment Corporation, a Massachusetts 
corporation ("Digital"), to BEA Systems, Inc., a Delaware corporation 
("Purchaser"). All capitalized terms used herein and not defined herein shall 
have the respective meanings ascribed to them in the Middleware Acquisition 
and License Agreement, dated January 31, 1997 between Seller and Purchaser 
(the "Agreement").

     WHEREAS, pursuant to the Agreement, Seller has agreed to sell, transfer, 
convey, assign and deliver to Purchaser certain assets used in the Business, 
and Purchaser has agreed to assume certain of the liabilities of Seller.

     NOW, THEREFORE, in consideration of the execution and delivery of the 
Agreement and for other good and valuable consideration, the receipt and 
sufficiency of which are hereby acknowledged, Seller hereby agrees as follows:

     1. Seller hereby sells, transfers, conveys, assigns and delivers to 
Purchaser, its successors and assigns, to have and to hold forever, all of 
Seller's rights, title and interest in and to the Middleware Assets.

Notwithstanding the foregoing, the assets to be transferred to Purchaser 
under this Bill of Sale shall not include the Retained Assets.

     2. This sale, transfer, conveyance and assignment has been executed and 
delivered by Seller in accordance with the Agreement and is expressly made 
subject to the terms and conditions thereof.

     3. The terms and conditions of this Bill of Sale shall be governed and 
construed in accordance with the laws of the Commonwealth of Massachusetts.

     4. Seller, by its execution of this Bill of Sale, and Purchaser, by its 
acceptance of this Bill of Sale, each hereby acknowledges and agrees that 
neither the representations and warranties nor the rights and remedies of any 
party under the Agreement shall be deemed to be enlarged, modified or altered 
in any way by this Bill of Sale.

     IN WITNESS WHEREOF, Seller and Purchaser have caused this Bill of Sale 
to be executed under seal as of the date first above written.

                                        DIGITAL EQUIPMENT CORPORATION

                                        By: -------------------------
                                        Name: -----------------------
ACCEPTED:                               Title: ----------------------

BEA SYSTEMS, INC.

By: -------------------------
Name: -----------------------
Title: ----------------------

<PAGE>

                                 EXHIBIT IV

                     ASSIGNMENT OF PATENTS AND TRADEMARKS

     WHEREAS, DIGITAL EQUIPMENT CORPORATION, a Massachusetts Corporation 
having its principal executive offices at 111 Powdermill Road, Maynard, 
Massachusetts 01754 ("Digital"), is the owner of the trademark 
"OBJECTBROKER", listed on Attachment I, and is the owner of patents and 
patent applications which are listed on Attachment II; and

     WHEREAS, BEA Systems Inc., a Delaware corporation with a place of 
business at 385 Moffett Park Drive, Suite 105, Sunnyvale, CA 94089-1208 
("BEA") is desirous of acquiring all of Digital's right, title and interest 
in and to said trademark; and said patents and patent applications.

     NOW, THEREFORE, for good and valuable consideration, Digital hereby 
assigns to BEA, all of Digital's right, title and interest in and to said 
trademark and all good will associated therewith, and subject to any and all 
existing licenses, all of Digital's right, title, and interest in and to said 
patents and said patent applications.

     Nothing in this Assignment of Patents And Trademarks, expressed or 
implied, is intended or shall be construed to confer upon, or to give to, any 
person, firm, corporation, or other entity other than Digital, BEA and their 
respective successors and permitted assigns, any right or remedy under or by 
reason of this Assignment of Patents And Trademarks or any term, covenant, or 
condition hereof, and all the terms, covenants, conditions, promises, and 
agreements contained in this Assignment of Patents And Trademarks shall be 
for the sole and exclusive benefit of Digital, BEA and their respective 
successors and permitted assigns.

Signed at Maynard, Massachusetts, this ----- day of -----, 1997.

     DIGITAL EQUIPMENT CORPORATION
     By: -------------------------
     Name: -----------------------
     Title: ----------------------

Commonwealth of Massachusetts     )
                                  )     ss.
County of Middlesex               )

Subscribed and sworn to before me on this ----- day of -----, 1997.

- --------------------
Notary Public
Commission Expires:

<PAGE>

ATTACHMENT I

MARK          TERRITORY  APPLICATION DATE & NUMBER  REGISTRATION DATE & NUMBER
OBJECTBROKER  USA        9 SEP 1993, 74/434349      15 AUG 1995, 1912324

<PAGE>

ATTACHMENT II                    APPLICATIONS/PATENTS

<TABLE>
<CAPTION>

Matter No.:  Country Code:  Application No.:  Filed Date:  Patent No.:  Issue Date  Patent Status  Matter Title:
<S>          <C>            <C>               <C>          <C>          <C>         <C>            <C>
                                                                                                   METHODS AND APPARATUS FOR
                                                                                                   IMPLEMENTING DATA BASES TO
                                                                                                   PROVIDE OBJECT-ORIENTED 
PD90-0327         US            07/567,298      14-Aug-90    5,280,610    19940118        I        INVOCATION OF APPLICATIONS
PD90-0327         AU              79309/91      26-Jun-91       638138    19931011        I
PD90-0327         CA             2,049,133      13-Aug-91                                 P
PD90-0327         JP             202703/91      13-Aug-91                                 P
PD90-0327         TW               8016381      13-Aug-91     NI-55644    19920722        I
PD90-0327         GB            91306172.7       8-Jul-91       472279    19950816        I
PD90-0327         FR            91306172.7       8-Jul-91       472279    19950816        I
PD90-0327         DE            91306172.7       8-Jul-91   69112156.7    19950816        I
PD90-0327         IT            91306172.7       8-Jul-91       472279    19950816        I
PD90-0327         NL            91306172.7       8-Jul-91       472279    19950816        I


                                                                                                   METHODS AND APPARATUS FOR 
                                                                                                   PROVIDING DYNAMIC INVOCATION OF
                                                                                                   APPLICATIONS IN A DISTRIBUTED
PD90-0275         US            07/567,389      14-Aug-90                                  A       HETEROGENEOUS ENVIRONMENT
PD90-0275         AU              79454/91      26-Jun-91       639802    19931130         I
PD90-0275         CA             2,049,121      13-Aug-91    2,049,121    19960813         I
PD90-0275         JP             202700/91      13-Aug-91      2011115    19960202         I
PD90-0275         EPO           91306128.9       5-Jul-91                                  P
PD90-0275         TW              80106379      13-Aug-91     NI-68177    19950215         I
PD90-0275CON      US            08/148,607       3-Nov-93    5,341,478    19940823         I


                                                                                                   METHOD AND APPARATUS FOR 
                                                                                                   PROVIDING A CLIENT INTERFACE
                                                                                                   TO AN OBJECT-ORIENTED INVOCATION
PD90-0326         US            07/567,303      14-Aug-90                                  A       OF AN APPLICATION
PD90-0326         TW              80106380      13-Aug-91     NI-56710    19920923         I
PD90-0326         AU              79310/91      26-Jun-91       628264    19930121         I
PD90-0326         CA             2,049,143      13-Aug-91                                  P
PD90-0326         JP             202702/91      13-Aug-91      1929856    19950512         I
PD90-0326         EPO           91306127.1       5-Jul-91                                  P
PD90-0326CON      US            08/263,901      22-Jun-94                                PNOA

TRADOC 100138.v1

</TABLE>

<PAGE>
                                   Exhibit V

                           CONVERTIBLE PROMISSORY NOTE

$17,000,000.00                                           Boston, Massachusetts
                                                              January 31, 1997

     BEA Systems, Inc., a Delaware corporation (the "Borrower"), for value 
received, hereby promises to pay to the order of Digital Equipment 
Corporation, a Massachusetts corporation (the "Payee"), the principal sum of 
Seventeen Million Dollars ($17,000,000.00) in lawful money of the United 
States of America in immediately available funds without interest except as 
provided herein. The principal amount of this Note shall be payable in the 
following installments:

     On or before February 1, 1998 -- $2,000,000.00 (the "First Installment")

     On or before February 1, 1999 -- $4,000,000.00 (the "Second Installment")

     On or before February 1, 2000 -- $11,000,000.00 (the "Third Installment")

1. PREPAYMENT

     The Borrower may prepay this Note in whole or in part without premium, 
penalty or fee at any time. If a voluntary or mandatory partial prepayment is 
made, it will not change the due date of any principal installment, but will 
first be applied to the payment of any fees, expenses or other costs the 
Borrower is obligated to pay hereunder; and then to reduce the amount of the 
latest principal installment payable hereunder.

2. PAYMENT OF COSTS AND EXPENSES

     The Borrower shall pay all costs and expenses, including, without 
limitation, reasonable attorneys' fees and all expenses and disbursements of 
counsel, in connection with the enforcement of any of the Payee's rights 
against the Borrower under this Note (whether or not suit is instituted by or 
against the Payee). If Borrower elects to prepay, Payee will quote to 
Borrower A present value discount of the amounts remaining to be paid under 
the Note based on Payee's standard practice.

3. AGREEMENT

     This Note is issued pursuant to a Middleware Acquisition and License 
Agreement by and between Borrower and Payee dated January 31, 1997 (the 
"Agreement"). The Agreement provides for restrictions on the transferability 
of this Note, which restrictions are incorporated by reference herein.

<PAGE>

4. EVENTS OF DEFAULT.

     (a) The occurrence of any of the following events shall constitute an 
"Event of Default";

          (i) Failure of the Borrower to make any payments when due hereunder;

         (ii) Default in the performance of any liability, covenant, 
    obligation or agreement of the Borrower contained herein;

        (iii) If a default shall occur, which is not cured within any 
    applicable grace period or a waiver therefor is not expressly provided in 
    writing, (x) in the payment of any principal, interest or premium with 
    respect to any indebtedness for borrowed money of the Borrower or (y) 
    under any agreement or instrument under or pursuant to which any such 
    indebtedness may have been issued, created, assumed, guaranteed or 
    secured by the Borrower, which shall permit (assuming the giving of 
    appropriate notice if required) the acceleration of such indebtedness 
    (without giving effect to any standstill or acceleration blockage period) 
    or if any such indebtedness shall be declared due and payable prior to 
    the stated maturity thereof or shall not be paid in full at the stated 
    maturity thereof;

         (iv) If the Borrower shall make an assignment for the benefit of 
    creditors or shall admit in writing its inability to pay its debts as 
    they become due;

          (v) If the Borrower shall file a voluntary petition in bankruptcy, or
    shall be adjudicated a bankrupt or insolvent, or shall file any petition 
    or answer seeking any reorganization arrangement, composition, 
    readjustment, liquidation, dissolution, or similar relief under the 
    United States bankruptcy code or other applicable federal, state or 
    similar statute, law or regulation, or shall seek or consent to or 
    acquiesce in the appointment of any trustee, receiver or liquidator of 
    the Borrower, as the case may be, or of all or any substantial part of 
    its properties;

         (vi) If within sixty (60) days after the commencement of any 
    proceedings against the Borrower seeking any reorganization, arrangement, 
    composition, readjustment, liquidation, dissolution or similar relief 
    under the United States bankruptcy code or other applicable federal, 
    state or similar statute, law or regulation, such proceeding shall not 
    have been dismissed or if, within sixty (60) days after the appointment, 
    without the consent or acquiescence of the Borrower, as the case may be, 
    or of all or any substantial part of its properties, such appointment 
    shall not have been vacated; or

        (vii) If the Borrower shall be dissolved or shall fail to maintain its
    existence in good standing, or if the usual business of the Borrower 
    shall be suspended or terminated.

                                     - 2 -

<PAGE>

     The Borrower agrees that it shall give prompt written notice to the 
Payee upon the occurrence of an Event of Default. Upon the occurrence of an 
Event of Default, all rights and remedies of the Payee under this Note and 
under applicable law shall be cumulative, not exclusive.

     (b) Upon the occurrence at any time of an Event of Default, the 
aggregate amount outstanding hereunder shall, at the option of the Payee, 
become immediately due and payable in full upon notice or demand in writing 
to the Borrower, provided, however, that upon the occurrence of an event 
under Clauses (iv), (v) or (vi) above, the aggregate amount outstanding shall 
automatically become due and payable in full. Upon this Note becoming due and 
payable in full, whether automatically or at the Payee's election, the rights 
of the Borrower and the Payee arising prior to the effective date thereof 
shall not be affected and the provisions hereof shall continue to be fully 
operative until all transactions entered into, rights created or amounts 
outstanding prior to such date shall have been fully disposed of, concluded 
or liquidated. All representations, warranties, covenants, waivers and 
agreements contained herein shall survive termination hereof unless otherwise 
provided. Notwithstanding the foregoing, if after receipt of any payment of 
all or any part of the amounts owed hereunder, the Payee is for any reason 
compelled to surrender such payment to any person or entity because such 
payment is determined to be void or voidable as a preference, impermissible 
setoff, a diversion of trust funds or for any other reason, the Borrower 
shall be liable to, and shall indemnify and hold the Payee harmless for, the 
amount of such payment surrendered until the Payee shall have been finally 
and irrevocably paid in full. The provisions of the foregoing sentence shall 
be and remain effective notwithstanding any contrary action which may have 
been taken by the Payee in reliance upon such payment, and any such contrary 
action so taken shall be without prejudice to the Payee's rights under this 
Note and shall be deemed to have been conditioned upon such payment having 
become final and irrevocable. From and after maturity or acceleration of the 
Note, whichever shall first occur, interest shall be payable on the entire 
unpaid balance, until paid in full, at an annual rate equal to the prime rate 
as published in THE WALL STREET JOURNAL.

5. COVENANTS.

     (a) The Borrower shall provide to the Payee monthly financial statements 
of the Borrower as soon as such statements become available and in any event 
within thirty (30) days after the end of each calendar month.

     (b) Upon reasonable notice, the Borrower shall afford the Payee and its 
representatives access during normal business hours, to the offices, 
properties, books and records of the Borrower and furnish to the Borrower and 
its representatives such additional financial and other information regarding 
the Borrower and its business as the Payee may from time to time request.

6. CONVERSION

     (a) RIGHT TO CONVERT. The Payee shall have the right, at its option, on 
or before the Installment payments dates to convert, subject to the terms and 
provisions of this Section 6, the then amount of an Installment into such 
number of fully paid and non-assessable shares of Common Stock as is equal to 
the quotient of the principal of such installment being so converted

                                       - 3 -

<PAGE>

divided by the Conversion Price (as defined below) then in effect. The 
Conversion Price shall be as set forth below, subject to adjustment as set 
forth in paragraphs (b) and (c) of this Section 6.

     The First Installment:    1.5 times the price per share at which such
                               Common Stock is offered to the public in the
                               Borrower's initial public offering ("the IPO 
                               Price")

     The Second Installment:   1.8 times the IPO Price

     The Third Installment:    2.5 times the IPO Price up to a total of 
                               $5,000,000.00

     Such conversion right shall be exercised by written notice to Borrower 
given at least ten (10) business days prior to the date of the relevant 
installment. The shares of Common Stock delivered upon such conversion shall 
be delivered on the applicable Installment Date free of any restrictions on 
resale by Payee, including without limitation, any restrictions imposed by 
Federal or state securities laws as provided in Section 3.2.3 of the 
Agreement.

     (b) ADJUSTMENT OF CONVERSION PRICE. The Conversion Price with respect to 
all remaining Installments shall be subject to adjustment as follows: In case 
the Borrower shall at any time or from time to time (i) pay a dividend or 
make a distribution on the outstanding shares of Common Stock in shares of 
Common Stock of the Borrower, (ii) subdivide the outstanding shares of Common 
Stock into a larger number of shares of Common Stock, (iii) combine the 
outstanding shares of Common Stock into a smaller number of shares of Common 
Stock, or (iv) issue any equity interest in a reclassification of the Common 
Stock, then, and in each such case, the Conversion Price in effect 
immediately prior to such event shall be adjusted (and any other appropriate 
actions shall be taken by the Borrower) so that the Payee shall be entitled 
to receive the number of shares of Common Stock or other securities of the 
Borrower that the Payee would have owned or would have been entitled to 
receive upon or by reason of any of the events described above, had this Note 
been converted immediately prior to the occurrence of such event with respect 
to each of the remaining Installments. An adjustment made pursuant to this 
Subsection (b) shall become effective retroactively (i) in the case of any 
such dividend or distribution, to a date immediately following the close of 
business on the record date for the determination of holders of Common Stock 
entitled to receive such dividend or distribution or (ii) in the case of any 
such subdivision, combination or reclassification, to the close of business 
on the day upon which such corporate action becomes effective.

     In case the Borrower at any time or from time to time shall take any 
action affecting the Common Stock or its other equity interests, if any, 
other than an action described above, then, an adjustment shall be made in 
the Conversion Price in such manner and at such time as the Board of 
Directors of the Borrower in good faith determines to be equitable in the 
circumstances (such determination to be evidenced in a resolution, a 
certified copy of which shall be mailed to the Payee).

     (c) SUBSEQUENT TRANSACTIONS. In the case of any capital reorganization 
or reclassification or other change of outstanding Common Stock or other 
equity interests, if any, or in case of any consolidation or merger of the 
Borrower with or into another person (other

                                      - 4 -

<PAGE>

than a consolidation or merger in which the Borrower is the resulting or 
surviving person and which does not result in any reclassification or change 
of Common Stock or other outstanding equity interests, if any), or in case of 
any sale or other disposition to another person of all or substantially all 
of the assets of the Borrower (any of the foregoing, a "Transaction"), the 
Borrower, or such successor or purchasing person, as the case may be, shall 
execute and deliver to the Payee at least 10 Business Days prior to effecting 
any of the foregoing Transactions a certificate stating that the Payee shall 
have the right thereafter in connection with each remaining Installment to 
convert this Note into the kind and amount (estimating such amount to the 
extent necessary) of equity securities or other securities (of the Borrower 
or another issuer) or property or cash which would be receivable upon such 
Transaction by a holder of the number of shares of Common Stock into which 
such Installment would have been convertible immediately prior to such 
Transaction.

7. GENERAL.

     (a) The Borrower hereby waives presentment, demand, notice, protest and 
all other demands and notices in connection with the delivery, acceptance, 
performance, default or enforcement hereof. No delay or omission on the part 
of the Payee in exercising or enforcing any of its right, powers, privileges 
or remedies hereunder (collectively, "Rights") shall operate as a waiver 
thereof, and a waiver of any Rights on any one occasion shall not be 
construed as a bar to or waiver of any Rights on any future occasion. No act, 
omission or delay by the Payee or course of dealing between the Payee and the 
Borrower shall constitute a waiver of Rights of the Payee hereunder.

     (b) In the event that any court having jurisdiction shall determine that 
any covenant or other provision contained in this Note shall be unreasonable 
or unenforceable in any respect, then such covenant or other provision shall 
be deemed limited to the extent that such court deems it reasonable and 
enforceable, and as so limited shall remain in full force and effect. In the 
event that such court shall deem any such covenant or other provision wholly 
unenforceable, the remaining covenants and other provisions of this Note 
shall nevertheless remain in full force and effect.

     (c) This Note is given to evidence debt for business or commercial 
purposes and shall take effect as a sealed instrument and shall be governed 
by the law of The Commonwealth of Massachusetts (without giving effect to the 
conflict of law principles thereof). Any legal action or proceeding with 
respect to this Note shall be brought in the courts of The Commonwealth of 
Massachusetts or of the United States of America for the District of 
Massachusetts, and, by execution and delivery of this Note, the Borrower 
hereby accepts for itself and in respect of its property, generally and 
unconditionally, the jurisdiction of the aforesaid courts. The Borrower and 
each holder hereof hereby knowingly, voluntarily, intentionally and 
irrevocably waives, in connection with any such action or proceeding: (i) any 
objection, including, without limitation, any objection to the laying of 
venue or based on the grounds of forum non conveniens, which it may now or 
hereafter have to the bringing of any such action or proceeding in such 
respective jurisdictions, (ii) except as otherwise provided herein, the right 
to interpose any setoff, non-compulsory counterclaim or cross-claim and (iii) 
to the maximum extent not prohibited by law, any right it may have to a trial 
by jury in respect of any litigation directly or indirectly arising out of, 
under or in connection with this Note. The Borrower irrevocably consents to 
the service

                                       - 5 -

<PAGE>

of process of any of the aforementioned courts in any such action or 
proceeding by the mailing of copies thereof in the manner provided in 
paragraph (e) of this Section 7.

     (d) This Note shall be binding upon the Borrower and its successors and 
assigns and shall inure to the benefit of the Payee and its successors and 
assigns, provided, however, that Borrower shall not assign its obligations 
hereunder without the Payee's consent, which may be given or withheld in the 
Payee's sole discretion.

     (e) All notices, requests, consents and other communications hereunder 
shall be in writing, shall be addressed to the receiving party's address set 
forth below or to such other address as a party may designate by notice 
hereunder, and shall be either (i) delivered by hand, (ii) sent by reputable 
overnight courier, or (iii) sent by registered or certified mail, return 
receipt requested, postage prepaid.

     If to the Payee:       Digital Equipment Corporation
                            111 Powdermill Road
                            Maynard, Massachusetts 01754
                            Attn: Paul Millbury, Treasurer
                            Telephone No.: (508) 461-6700

     with a copy to:        Digital Equipment Corporation
                            111 Powdermill Road
                            Maynard, Massachusetts 01754-1499
                            Attn: Eric Thorp, Esq.
                            Telephone No.: (508) 493-9249
                            Facsimile No.: (508) 493-5431

     with an additional copy to:

                             Mintz, Levin, Cohn, Ferris
                              Glovsky and Popeo, P.C.
                             One Financial Center
                             Boston, Massachusetts 02111
                             Attn: Thomas J. Kelly, Esq.
                             Telephone No.: (617) 542-6000
                             Facsimile No.: (617) 542-2241

                                     - 6 -

<PAGE>

     If to the Borrower:

                             BEA Systems, Inc.
                             385 Moffett Park Drive
                             Suite 105
                             Sunnyvale, California 94089-1208
                             Attn: Edward W. Scott, Jr.,
                                   Executive Vice President
                             Telephone No.: (408)
                             Facsimile No.: (408)

     with a copy to:         BEA Systems, Inc.
                             385 Moffett Park Drive
                             Suite 105 
                             Sunnyvale, California 94089-1208
                             Attn: Edward Durney, Esq.
                                   General Counsel
                             Telephone No.: (408) 743-0049
                             Facsimile No.: (408) 743-9230

     with an additional copy to:

                             Morrison & Foerster
                             1290 Avenue of the Americas
                             New York, New York 10104
                             Attn: John Kennedy, Esq.
                             Telephone No.: (212) 468-8000
                             Facsimile No.: (212) 468-7900

     All notices, requests, consents and other communications hereunder shall 
be deemed to have been given either (i) if by hand, at the time of the 
delivery thereof to the receiving party at the address of such party set 
forth above, (ii) if sent by overnight courier, on the next business day 
following the day such notice is delivered to the courier service, or (iii) 
if sent by registered or certified mail, on the 5th business day following 
the day such mailing is made.

     (f) No provision hereof shall be modified, altered or limited except by 
a written instrument expressly referring to this Note and to such provision, 
and executed by the parties hereto.

     (g) The obligations of the Borrower hereunder shall not be reduced to 
satisfy any other obligations between the Payee (including any of its 
affiliates) and the Borrower pursuant to any other agreement or arrangement 
between such parties or otherwise.

     (h) If any date that may at any time be specified in this Note as a 
date for the making of any payments under this Note shall fall on Saturday, 
Sunday or on a day which in

                                      - 7 -

<PAGE>

Massachusetts shall be a legal holiday, then the date for the making of that 
payment shall be the next subsequent day which is not a Saturday, Sunday or 
legal holiday.

     IN WITNESS WHEREOF, this Note has been executed and delivered as a 
sealed instrument on the date first above written by the duly authorized 
representative of the Borrower.

                                     BEA Systems, Inc.


- ----------------------------         By: ---------------------------------
Witness                                       Executive Vice President

                                     - 8 -
<PAGE>

                             FIRST AMENDMENT TO 

             MIDDLEWARE ACQUISITION AND LICENSE AGREEMENT 

                               BY AND BETWEEN 

                      DIGITAL EQUIPMENT CORPORATION 

                                    AND 

                              BEA SYSTEMS, INC.

     This First Amendment to Middleware License and Acquisition Agreement (the
"First Amendment") is entered into and effective as of this ____ day of March,
1997 (the "Execution Date"), by and between Digital Equipment Corporation, a
Massachusetts corporation with a place of business at 129 Parker Street,
Maynard, Massachusetts 01754 ("Digital"), and BEA Systems, Inc., a Delaware
corporation with a place of business at 385 Moffett Park Drive, Suite 105,
Sunnyvale, California 94089-1208 ("BEA").

1.   STATEMENT OF PURPOSE.

     1.1. Digital and BEA are parties to that certain Middleware Acquisition and
          License Agreement, dated as of January 31, 1997 (the "Agreement")
          pursuant to which Digital agreed to sell or license to BEA, and BEA
          agreed to purchase or license, the Middleware Assets (as defined in
          the Agreement) upon the terms therein provided.

     1.2. Digital and BEA wish to amend the Agreement to modify certain of the
          consideration to be paid or otherwise provided by BEA to Digital for
          the Middleware Assets upon the terms herein provided.

2.   SCOPE OF AMENDMENT, PRIOR DEFINITIONS.

          This First Amendment shall only serve to modify and amend those
          portions of the Agreement specifically modified and amended herein,
          and except as so modified and amended herein, the Agreement shall
          remain in full force and effect in accordance with its terms.  Except
          as provided in Section 3 below, the definitions set forth in the
          Agreement, including without limitation, those definitions contained
          in Section 2 thereof, shall apply for purposes of this First
          Amendment.
          
3.   ADDITIONAL DEFINITIONS.

     3.1. "Closing Date" means, unless otherwise agreed by the parties, March
          26, 1997, or, if the conditions to closing have not been met as of
          such date, then on the first Friday after they are met, but in any
          event no later than April 30, 1997.

                                       1
<PAGE>

     3.2. "Warrant" shall mean that certain Warrant to Purchase Common Stock 
          attached hereto as Exhibit VI.

4.   OBLIGATIONS OF BEA PRIOR TO CLOSING.

     4.1. Section 3.4.2 of the Agreement shall be amended to add Subsection (f)
          thereto, which Subsection (f) shall read in its entirety as follows:

          "(f)  a duly executed Warrant in substantially the form of
          Exhibit VI attached hereto."

5.   CONSIDERATION.

     5.1. Section 9 of the Agreement shall be modified and amended to read in
          its entirety as follows:

          "9.  CONSIDERATION.

               9.1  Transfer of Middleware Assets.  In consideration for
          the purchase by BEA of the Middleware Assets pursuant to
          Section 4 hereof, BEA shall make payments to Digital as
          follows:

                    9.1.1     At the Closing, BEA shall execute and
          deliver to Digital a promissory note in the original principal
          amount of $17 million in the form attached hereto as Exhibit V
          (the 'Note").  Digital agrees that (a) it will not assign the
          Note to any entity other than a bank or other financial
          institution without first obtaining BEA's consent to such
          assignment and (b) before it assigns the Note to any third
          party, it shall have given BEA thirty (30) days prior written
          notice of such intended assignment and the opportunity to
          purchase the Note from Digital on terms no less favorable to
          BEA than the terms offered to such third party.

                    9.1.2     At the Closing, BEA shall execute and
          deliver to Digital the Warrant in the form attached hereto as
          Exhibit VI.  The Warrant shall be transferable by Digital in
          accordance with Section 12 thereof. 

                    9.1.3     Subject to Section 9.3 below, BEA shall
          pay to Digital the sum of $2,000,000 on the earlier of
          June 20, 1997 or the date which is 30 days after the
          consummation of the initial sale by BEA pursuant to a firm
          commitment underwriting to the public of BEA Common Stock,
          $.001 par value per share ("Common Stock") as registered under
          the 


                                       2
<PAGE>


          Securities Act of 1933, as amended (the "Act") (which sale
          is hereinafter referred to as the "Initial Public Offering").

                    9.1.4     BEA shall pay to Digital the sum of
          $3,000,000 on June 20, 1997. 

                    9.1.5     BEA agrees that until it has fully
          satisfied its payment obligations to Digital under the Note
          referenced in Section 9.1.1 above or in its obligation to pay
          Digital $2 million in BEA stock or in cash pursuant to
          Sections 9.1.3 and $3 million in cash pursuant to Section
          9.1.4 hereof, it shall not sell or assign any of the
          Middleware Assets to any entity other than a Subsidiary of BEA
          or the purchaser of substantially all the assets of BEA.  The
          sale of a fifty percent (50%) or greater interest in such a
          Subsidiary of BEA shall constitute a prohibited sale
          hereunder.

               9.2  DEFAULT.  In the event that BEA defaults in its
          payment obligations under the Note referenced in Section 9.1.1
          above or Section 9.3 below or in its obligation to pay Digital
          $2 million in BEA stock or in cash pursuant to Section 9.1.3
          or $3 million in cash pursuant to Section 9.1.4 above, then
          the licenses granted by Digital to BEA pursuant to
          Sections 4.1 and 4.2 hereof shall terminate upon notice
          thereof by Digital to BEA.  Following such termination, BEA
          shall promptly (i) cease all use of the Software and
          Documentation and the Proprietary Rights; (ii) convey back to
          Digital the Middleware Assets; (iii) transfer to Digital any
          Software and Documentation inventory in its possession or
          under its control; (iv) assign to Digital any modifications
          that BEA may have made to, or derivative works that BEA may
          have made of the Software and Documentation; (v) deliver to
          Digital any other physical embodiments of the Software and
          Documentation in its possession or under its control; and
          (vi) certify in writing to Digital its compliance with the
          foregoing.  All of the foregoing shall be done at BEA's sole
          expense.

               9.3  In the event that BEA shall determine to proceed
          with an Initial Public Offering, BEA shall give notice to
          Digital of such determination not later than five (5) days
          following the initial filing by BEA of a registration
          statement under the Act (the "Registration Statement") with
          the Securities and Exchange Commission ("SEC") as to the
          Initial Public Offering.  Digital shall thereafter have 28
          days from the date of such notice to elect to purchase up to
          $2 million in 


                                       3
<PAGE>


          shares of Common Stock in the Initial Public Offering at the 
          same offering price per share as BEA shall be Offering its 
          Common Stock to other investors in the Initial Public Offering.
          Digital's right to participate in the Initial Public Offering 
          shall be subject to the offering and sale by underwriters of 
          the shares of Common Stock to be issued to Digital pursuant to 
          this Section 9.3, and any obligation of Digital pursuant to this 
          Section 9.3 to purchase shares of Common Stock and of BEA to 
          issue and sell such common stock shall be subject to the 
          Registration Statement being declared effective and remaining 
          effective at the time of such issue and sale.  In the event the 
          Registration Statement shall not be declared effective within 90 
          days of Digital's original election, Digital shall have the right to
          rescind such election by a second notice to BEA.  To the
          extent that Digital shall purchase shares of Common Stock
          pursuant to Section 9.3 above, BEA agrees to prepay amounts
          owing pursuant to Section 9.1.3 hereof within ten (10) days of
          such purchase in an amount equal to the gross proceeds paid by
          Digital for Common Stock in the Initial Public Offering. 
          Digital's rights under this Section 9.3 (other than its right
          to receive the payment provided for in the immediately
          preceding sentence) shall terminate immediately after the
          closing of the Initial Public Offering or the payment in full
          of those amounts owing to Digital pursuant to 9.1.3 above,
          whichever occurs first."

     5.2. The parties agree that the notices referred to in Section 9.3 as
          amended, have been given and reflect Digital's election to purchase $2
          million in shares of Common Stock.

6.   COUNTERPARTS.

          This First Amendment may be executed simultaneously in any number of
          counterparts, each of which shall be deemed an original but all of
          which shall constitute one and the same instrument.


                                       4
<PAGE>

          
     IN WITNESS WHEREOF, the parties have caused this First Amendment to be
executed by their duly authorized representatives; effective as of the date
first above written.

DIGITAL EQUIPMENT CORPORATION      BEA SYSTEMS, INC.,


By: _________________________      By:  _________________________

Name: _______________________      Name: ________________________

Title: ______________________      Title: _______________________

Date: _______________________      Date: ________________________


                                  5
<PAGE>

                                   EXHIBIT VI

                                     WARRANT



$3,000,000                                      Sunnyvale, California
                                                       March __, 1997


                               BEA SYSTEMS, INC.
                      WARRANT TO PURCHASE COMMON STOCK

          This Warrant is issued to Digital Equipment Corporation, a
Massachusetts corporation by BEA Systems, Inc., a Delaware corporation (the
"Company"), pursuant to the terms of that certain Middleware Acquisition and
License Agreement dated as of January 31, 1997, as amended (the "Agreement"). 
All provisions of the Agreement applicable hereto are incorporated herein by
reference.  Unless otherwise indicated herein, defined terms shall have the same
meaning for the purpose of this Warrant as set forth in the Agreement.

     1. PURCHASE OF SHARES.  Subject to the terms and conditions of the 
Agreement and as hereinafter set forth, the holder of this Warrant is 
entitled, upon surrender of this Warrant at the principal office of the 
Company (or at such other place as the Company shall notify the holder hereof 
in writing), to purchase from the Company that number of fully paid and 
nonassessable shares (the "Shares") of Common Stock of the Company (the 
"Common Stock") as is determined by dividing $3,000,000 by the price per 
share at which the Common Stock is offered to the public in the Company's 
initial public offering (the "IPO").  

     2.   PURCHASE PRICE.  The purchase price for the Shares shall be subject to
adjustment pursuant to Section 7 hereof (such price, as adjusted from time to
time, is herein referred to as the "Exercise Price").  

     3.   EXERCISE PERIOD.  This Warrant shall be exercisable following one
hundred eighty (180) days after the date of the final prospectus for the IPO
(the "Public Offering Date") and shall remain exercisable for twelve (12) months
thereafter, but in any event this Warrant shall terminate and not become
exercisable if the Public Offering Date does not occur by March 31, 2002.  

     4.   METHOD OF EXERCISE.  

               (a)  While this Warrant remains outstanding and exercisable in
accordance with Section 3 above, the holder may exercise, in whole or in part,
the purchase rights evidenced hereby.  Such exercise shall be effected by:  


                                     1
<PAGE>

                    (i)  the surrender of the Warrant, together with a duly
executed copy of the form of subscription attached hereto, to the Secretary of
the Company at its principal offices; and  

                    (ii) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.

               (b)  RIGHT TO CONVERT WARRANT.  The holder hereof shall have the
right to convert this Warrant, by the surrender of this Warrant and the Notice
of Conversion form annexed hereto duly executed at the office of the Company in
Sunnyvale, California (or such other office or agency of the Company as it may
designate by notice in writing to the registered holder hereof at the address of
such holder appearing on the books of the Company), in whole but not in part, at
any time before the close of business on the last day of the exercise period
provided for in Section 3 hereof, into shares of Common Stock as provided for in
this Section 4(b).  Upon exercise of this conversion right, the holder hereof
shall be entitled to receive that number of shares of Common Stock of the
Company equal to the quotient obtained by dividing [(A - B)] by (A), where:  

                    (A)  =    the Fair Market Value (as defined below) of one
                              share of Common Stock on the date of conversion of
                              this Warrant.

                    (B)  =    the Exercise Price for one share of Common Stock
                              under this Warrant.

                    (X)  =    the number of shares of Common Stock issuable upon
                              exercise of this Warrant.

                    If the above calculation results in a negative number, then
no shares of Common Stock shall be issued or issuable upon conversion of this
Warrant.

                    "Fair Market Value" of a share of Common Stock shall mean
the closing price of the Common Stock on the NASDAQ Stock Market on the trading
day immediately proceeding on the date the Notice of Conversion is given.

                    Upon conversion of this Warrant, the holder hereof shall be
entitled to receive a certificate for the number of shares of Common Stock
determined as aforesaid.

     5.   CERTIFICATES FOR SHARES.  Upon the exercise of the purchase rights
evidenced by this Warrant, one or more certificates for the number of Shares so
purchased shall be issued as soon as practicable thereafter, and in any event
within thirty (30) days of the delivery of the subscription notice.  


                                     2
<PAGE>

     6.   VALID ISSUANCE OF SHARES.  The Company covenants that the Shares, when
issued pursuant to the exercise of this Warrant, will be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges
with respect to the issuance thereof.

     7.   ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.  The number of and
kind of securities purchasable upon exercise of this Warrant and the Exercise
Price shall be subject to adjustment from time to time as follows:  

               (a)  ADJUSTMENT OF EXERCISE PRICE.  The Exercise Price with
respect to the Shares shall be subject to adjustment as follows:  In case the
Company shall at any time following the IPO but prior to the expiration of this
Warrant, (i) pay a dividend or make a distribution on the outstanding shares of
Common Stock in shares of Common Stock of the Company, (ii) subdivide the
outstanding shares of Common Stock into a larger number of shares of Common
Stock, (iii) combine the outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv) issue any equity interest in a
reclassification of the Common Stock, then, and in each such case, the Exercise
Price in effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Company) so that the holder of this
Warrant shall be entitled to receive the number of shares of Common Stock or
other securities of the Company that the holder would have owned or been
entitled to receive upon or by reason of any of the events described above, had
this Warrant been exercised immediately prior to the occurrence of such event
with respect to any unexercised portion of the Warrant.  An adjustment made
pursuant to this Section 7 shall become effective retroactively (i) in the case
of any such dividend or distribution, to a date immediately following the close
of business on the record date for the determination of holders of Common Stock
entitled to receive such dividend or distribution or (ii) in the case of any
such subdivision, combination or reclassification, to the close of business on
the day upon which such corporate action becomes effective.  In case the Company
at any time or from time to time shall take any action affecting the Common
Stock or its other equity interests, if any, other than an action described
above, then an adjustment shall be made in the Exercise Price in such manner and
at such time as the Board of Directors of the Company in good faith determines
to be equitable in the circumstances (such determination to be evidenced in a
resolution, a certified copy of which shall be mailed to the holder of this
Warrant).

               (b)  SUBSEQUENT TRANSACTIONS.  If at any time after the Public
Offering Date and in case of any capital reorganization or reclassification, or
other change of outstanding Common Stock or other equity interest, if any, or in
the case of any consolidation or merger of the Company with or into another
person (other than a consolidation or merger in which the Company is the
resulting or surviving person and which does not result in any reclassification
or change in the Common Stock or other outstanding equity interest, if any), or
in case of any sale or other disposition to another person of all or
substantially all of the assets of the borrower (any of the foregoing, a
"transaction"), the Company, or such successor or purchasing person, as the case
may be, shall execute and deliver to the holder of this Warrant at least ten
business days prior to effecting any of the foregoing Transactions a certificate
stating that the holder shall have the right thereafter in connection with any
remaining portion of this Warrant to exercise this Warrant into the kind and
amount (estimating such amount to the extent necessary) of equity 


                                     3
<PAGE>

securities or other securities (of the Company or another issuer) or property 
or cash which would be receivable upon such Transaction by a holder of the 
number of shares of Common Stock into which such unexercised portion of the 
Warrant would have been exercisable for immediately prior to such Transaction.

     8.   NO FRACTIONAL SHARES OR SCRIP.  No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.  

     9.   NO STOCKHOLDER RIGHTS.  Prior to exercise of this Warrant, the holder
shall not be entitled to any rights of a stockholder with respect to the Shares,
including (without limitation) the right to vote such Shares, receive dividends
or other distributions thereon, exercise preemptive rights or be notified of
stockholder meetings.  Holder shall be entitled to notices and other
communications concerning the business or affairs of the Company, as provided in
the Agreement.  

     10.  SUCCESSORS AND ASSIGNS.  The terms and provisions of this Warrant and
the Agreement shall inure to the benefit of, and be binding upon, the Company
and the holders hereof and their respective successors and assigns.  The Warrant
is not transferable other than by operation of law.

     11.  AMENDMENTS AND WAIVERS.  Any waiver or amendment of any term of this
Warrant shall be binding upon any subsequent holder of this Warrant.

     12.  RESALE OF SHARES.  The Company has undertaken a fairness hearing 
under California Corporations Code Section 25531 which has caused:  (i) the 
Warrant to be issued in compliance with the exemption from registration under 
Section 5 of the Securities Act of 1933, as amended (the "Act") afforded by 
Section 3(a)(10) thereof and (ii) any shares of Common Stock to be issued on 
conversion thereof to be free of any restrictions on resale by the holder 
hereof, including, without limitation, any restrictions imposed by the Act or 
state securities law. In the event that due to changed circumstances after 
the date of the issue hereof, the Company and/or the holder hereof shall 
reasonably determine that compliance with Section 3(a)(10) will not cause 
such Common Stock to be issued without resale restrictions, the holder hereof 
and the Company shall enter into an agreement providing for commercially 
reasonable obligations on the part of the Company (including if necessary, 
registering such Common Stock on Form S-1) to cause such Common Stock to be 
registered under the Act upon issuance thereof.

     13.  NOTICES.  All notices, requests, consents and other communications
hereunder shall be in writing, shall be addressed to the receiving party's
address set forth below or to such other address as a party may designate by
notice hereunder, and shall be either (i) delivered by hand, (ii) sent by
reputable overnight courier, or (iii) sent by registered or certified mail,
return receipt requested, postage prepaid.


                                     4
<PAGE>

     If to the Holder:        Digital Equipment Corporation
                              111 Powdermill Road
                              Maynard, Massachusetts 01754
                              Attn:  Paul Millbury, Treasurer
                              Telephone No.:  (508) 461-6700
     
     with a copy to:          Digital Equipment Corporation
                              111 Powdermill Road
                              Maynard, Massachusetts 01754
                              Attn:  Eric Thorp, Esq. 
                              Telephone No.:  (508) 493-9249
                              Facsimile No.:  (508) 493-5431
     
     with an additional 
     copy to:                 Mintz, Levin, Cohn, Ferris, Glovksy
                                 and Popeo, P.C.
                              One Financial Center
                              Boston, Massachusetts 02111
                              Attn:  Thomas J. Kelly, Esq.
                              Telephone No.:  (617) 542-6000
                              Facsimile No.:  (617) 542-2241
     
     If to the Company:       BEA Systems, Inc.
                              385 Moffett Park Drive
                              Suite 105
                              Sunnyvale, California 94089-1208
                              Attn:  Edward W. Scott, Jr.
                                       Executive Vice President
                              Telephone No.:  (408) 743-4000
                              Facsimile No.:  (408) 734-9234
     
     with a copy to:          BEA Systems, Inc.
                              385 Moffett Park Drive
                              Suite 105
                              Sunnyvale, California 94089-1208
                              Attn:  Edward Durney, Esq.
                                       General Counsel 
                              Telephone No.:  (408) 743-4000
                              Facsimile No.:  (408) 734-9234
     
     with an additional 
     copy to:                 Morrison & Foerster LLP
                              1290 Avenue of the Americas
                              New York, NY 10104
                              Attn:  John Kennedy, Esq.
                              Telephone No.:  (212) 468-8000
                              Facsimile No.:  (212) 468-7900


                                     5
<PAGE>

All notices, requests, consents, and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at the address of such party set forth above,
(ii) if sent by overnight courier, on the next business day following the day
such notice is delivered to the courier service, or (iii) if sent by registered
or certified mail, on the 5th business day following the day such mailing is
made.
     
     14.  GOVERNING LAW/JURISDICTION.  This Warrant shall be governed by the law
of The Commonwealth of Massachusetts (without giving effect to the conflict of
law principles thereof).  Any legal action or proceeding with respect to this
Warrant shall be brought in the courts of The Commonwealth of Massachusetts or
of the United States of America for the District of Massachusetts, and, by
execution and delivery of this Warrant, the Company hereby accepts for itself
and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts.  The Company and each holder hereof hereby knowingly,
voluntarily, intentionally and irrevocably waives, in connection with any such
action or proceeding:  (i) any objection, including, without limitation, any
objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such
action or proceeding in such respective jurisdictions, (ii) except as otherwise
provided herein, the right to interpose any setoff, non-compulsory counterclaim
or cross-claim, and (iii) to the maximum extent not prohibited by law, any right
it may have to a trial by jury in respect of any litigation directly or
indirectly arising out of, under or in connection with this Warrant.  The
Company irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
in the manner provided in Section 13.

    

                              BEA SYSTEMS, INC.
                              
                              
                              
                              By: ___________________________________
                              
                              
                                  ___________________________________
                                  Name, Title


                                     6
<PAGE>

                                SUBSCRIPTION



BEA Systems, Inc.
Attention:  Corporate Secretary


          The undersigned, the holder of the attached Warrant, hereby
irrevocably elects to purchase pursuant to the provisions of the attached
Warrant, _______ shares of the Common Stock of BEA Systems, Inc. (or such
securities issuable hereunder).

          Payment of the exercise price per share required under such Warrant
accompanies this Subscription.


                                WARRANTHOLDER:



                                _______________________________________


Date: _______________________   By:     _______________________________
                                Title   _______________________________

                                   Address: ___________________________



                                     7
<PAGE>

                          NOTICE OF CONVERSION

To:  BEA SYSTEMS, INC.

     (1)  The undersigned hereby elects to convert the attached Warrant into
such number of shares of Common Stock of BEA SYSTEMS, INC. as is determined
pursuant to Section 4A of such Warrant, which conversion shall be effected
pursuant to the terms of the attached Warrant.

     (2)  Please issue a certificate of certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified.

                              _______________________________
                                        (Name)

                              _______________________________
                                       (Address)


                                     8


<PAGE>


                                                      EXHIBIT 10.16


- --------------------------------------------------------------------------
- --------------------------------------------------------------------------

                     MANAGER/KEY EMPLOYEE BONUS PLAN
                            PLAN DESCRIPTION

                                  1997
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------



                         ELIGIBLE POSITIONS:
                              President
                       Executive Vice Presidents
                           Vice Presidents
                               Architects
                                Directors
                                Managers
                       Key Individual Contributors

                          BONUS PLAN DESCRIPTION


    Bonus pool will be established based on a percentage of the base salary, 
    as follows, which creates the TARGET BONUS AMOUNT. The basic premise is 
    that the higher one is in the organization, the more their total 
    compensation is "at risk".

A.  BONUS POOL CRITERIA

    The bonus pool will be funded by BEA Systems ACTUAL CONTRIBUTION for the 
    quarter and year, assuming that a threshold of 80% of the operating plan 
    is achieved. The Pool will be funded by Contribution, up to 50% of 
    Contribution, and will be paid out as outlined below.

B.  PAYOUT CRITERIA

    1.  The quarterly and annual bonus is comprised of a REVENUE and a 
        CONTRIBUTION component. 50% of the payout is based on BEA Systems 
        Contribution achievement and 50% of the payout is based upon Revenue 
        achievement. A threshold of 80% of the operating plan applies for 
        both components and must be met for a payout on either component. 
        Calculation of the bonuses will be based on the following formula and 
        should the plan for the quarter and year be exceeded at either level 
        (Contribution or Revenue), then the following accelerators, up to 
        200% for an individual's total bonus, will apply:

        Actual Achievement (Contribution or Revenue)

        ____________________________________  :         % Achievement

        Plan

        % Achievement:                       Payout
        -------------------------------------------

             0 to 79.99%                 0
            80% - 100%                   1% = 1.00%
         > 100% - 125%                   1% = 1.50%
         > 125% - 150%                   1% = 2% up to 200% total bonus

    2.  80% of the bonus will be allocated against quarterly plan performance 
        (20% per quarter) and 20% will be paid at year end, after the 
        year-end audit.

    3.  Directors, Managers, and Key Contributors have an MBO component, 
        which determines their payout on a quarterly basis. Directors, 
        Managers, and Key Contributors are responsible for completing goals 
        for the upcoming quarter and then reviewing their completion at the 
        end of the



<PAGE>

        quarter. Target bonuses for employees in this category will be paid 
        each quarter AS A FUNCTION OF THEIR GOALS COMPLETED. For example, if 
        90% of the goals are met, then 90% of their quarterly target will be 
        paid, plus any accelerators, if appropriate.

    4.  Should the total pool, funded by 50% of Contributions, not be large 
        enough to disburse amounts to all participants as indicated in #1 
        above, then the employees' base salary, as a percentage of total base 
        salaries of all participants, will be used to prorate and distribute 
        the pool.

    5.  The employee must be employed the entire quarter to receive the 
        quarterly bonus and be employed at the time of the quarterly and 
        annual payout to receive any bonus. The annual bonus will be prorated 
        for partial year service, however, at least one full quarter of 
        employment is required to receive an annual bonus. An employee may be 
        removed from the plan at any time, at management discretion. BEA 
        Management reserves the right to modify this plan at any time, in its 
        sole discretion.

                                     EXAMPLE
                                     -------


Vice President with an annual salary of $130,000 has a bonus target of 30%, 
or $39,000. Quarterly target is $7800.

Assuming for Q1, 1997, the projection for Operating Profit is $609,000. The 
pool would be funded up to 50% or $304,500 for all bonuses. If actual 
achievement is Contribution at 80% and Revenue at 115%, the following bonus 
would be paid the Vice President:

                                BONUS CALCULATION

Achievement Levels     Accelerators     Contribution     Revenue     Total
- -----------------------------------------------------------------------------
 80% to 100%           1% = 1%          $3120                        $3120*
100% to 125%           1% = 1.5%         0               $4777.50    $4777.50**

Total Bonus for Quarter:                                              $7897.50

*3900 X .80 = 3120

**3900 + (3900 X .15 X 1.5) = 4777.50

TOTAL BONUS FOR QUARTER:  $7897.50



<PAGE>
                                                                    EXHIBIT 11.1
 
                   COMPUTATION OF NET INCOME (LOSS) PER SHARE
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
   
<TABLE>
<CAPTION>
                                                                                               YEAR ENDED
                                                                                               JANUARY 31,
                                                                                        -------------------------
                                                                                            1996          1997
                                                                                        -------------  ----------
<S>                                                                                     <C>            <C>
HISTORICAL NET INCOME (LOSS) PER SHARE
Weighted average common shares outstanding for the period.............................         4,604        9,444
Common equivalent shares pursuant to Staff Accounting Bulletin Nos. 64 and 83.........        19,524       19,518
                                                                                        -------------  ----------
Shares used in per share computation..................................................        24,128       28,962
                                                                                        -------------  ----------
                                                                                        -------------  ----------
Net income (loss).....................................................................   $   (17,740)  $  (88,665)
Cumulative dividends on Series B redeemable convertible preferred stock...............            52          880
                                                                                        -------------  ----------
Net income (loss) applicable to common stock..........................................   $   (17,792)  $  (89,545)
                                                                                        -------------  ----------
                                                                                        -------------  ----------
Net income (loss) per share...........................................................   $     (0.74)  $    (3.09)
                                                                                        -------------  ----------
                                                                                        -------------  ----------
</TABLE>
    
 
   
<TABLE>
<CAPTION>
                                                                                                       YEAR ENDED
                                                                                                      JANUARY 31,
                                                                                                          1997
                                                                                                      ------------
<S>                                                                                                   <C>
PRO FORMA NET INCOME (LOSS) PER SHARE
Weighted average common shares outstanding for the period...........................................        9,444
Common equivalent shares pursuant to Staff Accounting Bulletin Nos. 64 and 83.......................       19,518
Common equivalent shares assuming conversion of preferred stock.....................................       22,200
Shares used in per share computation................................................................       51,162
                                                                                                      ------------
                                                                                                      ------------
Net income (loss)...................................................................................   $  (88,665)
                                                                                                      ------------
                                                                                                      ------------
Net income (loss) per share.........................................................................   $    (1.73)
                                                                                                      ------------
                                                                                                      ------------
</TABLE>
    


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