Exhibit 10.3

BEA SYSTEMS, INC.

1997 STOCK INCENTIVE PLAN

(amended and restated as of May 13, 1998)

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

 

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(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.

(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.

 

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(p) “Covered Employee” means an Employee who is a “covered employee” under
Section 162(m)(3) of the Code.

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

(r) “Dividend Equivalent Right” means a right entitling the Grantee to
compensation measured by dividends paid with respect to Common Stock.

(s) “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.

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

(u) “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 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.

(v) “Grantee” means an Employee, Director or Consultant who receives an Award
under the Plan.

(w) “Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code.

(x) “Non-Qualified Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

(y) “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.

 

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

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

(bb) “Performance - Based Compensation” means compensation qualifying as
“performance-based compensation” under Section 162(m) of the Code.

(cc) “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.

(dd) “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.

(ee) “Plan” means this 1997 Stock Incentive Plan.

(ff) “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.

(gg) “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor thereto.

(hh) “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.

(ii) “Share” means a share of the Common Stock.

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

(kk) “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 shall be seven million three
hundred sixty nine thousand six hundred fifty eight (7,369,658) Shares, and
annually, commencing with

 

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the first business day of each fiscal year of the Company beginning with
February 1, 1999 and thereafter, such maximum aggregate number of Shares shall
be increased by a number of Shares equal to the lesser of (i) three million five
hundred thousand (3,500,000) Shares or (ii) three and 50/100 percent (3.5%) of
the number of Shares outstanding as of the last day of the immediately preceding
fiscal year of the Company. 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 With Respect to Covered Employees. Notwithstanding the
foregoing, grants of Awards to any Covered Employee intended to qualify as
Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,
references to the “Administrator” or to a “Committee” shall be deemed to be
references to such Committee or subcommittee.

(iv) 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.

 

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(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;

(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

 

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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, 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

 

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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.

(j) Individual Option and SAR Limit. The maximum number of Shares with respect
to which Options and SARs may be granted to any Employee in any fiscal year of
the Company shall be one million (1,000,000) Shares. The foregoing limitation
shall be adjusted proportionately in connection with any change in the Company’s
capitalization pursuant to Section 10, below. To the extent required by
Section 162(m) of the Code or the regulations thereunder, in applying the
foregoing limitation with respect to an Employee, if any Option or SAR is
canceled, the canceled Option or SAR shall continue to count against the maximum
number of Shares with respect to which Options and SARs may be granted to the
Employee. For

 

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this purpose, the repricing of an Option (or in the case of a SAR, the base
amount on which the stock appreciation is calculated is reduced to reflect a
reduction in the Fair Market Value of the Common Stock) shall be treated as the
cancellation of the existing Option or SAR and the grant of a new Option or SAR.

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 Awards intended to qualify as Performance-Based
Compensation, the exercise or purchase price, if any, shall be not less than one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(iii) 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

 

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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 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.

 

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(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.

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, the maximum number of Shares with respect to which Options
and SARs may be granted to any Employee in any fiscal year of the Company, 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 (including the fixed Share limit on the annual increase in the number of
Shares available for issuance under 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,

 

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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.

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.

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.

 

12

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(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 Plan became effective when adopted by the Board on
March 19, 1997, and was approved by the Company’s stockholders on March 31,
1997. On May 13, 1998, the Board adopted and approved an amendment and
restatement of the Plan (a) to include Incentive Stock Options within the class
of Awards subject to the formula for determining the maximum aggregate number of
Shares that may be issued pursuant to Awards under the Plan, (b) to place a cap
on the annual increase in such maximum aggregate number of Shares determined
under the formula, (c) to permit the grant of Incentive Stock Options with
respect to the two million two hundred sixty nine thousand six hundred fifty
eight (2,269,658) Shares that became available for issuance under the Plan
pursuant to the formula on January 2, 1998 and (d) to adopt a limit on the
maximum number of Shares with respect to which Options and SARs may be granted
to any Employee in any fiscal year of the Company and certain other
administrative provisions to comply with the performance-based compensation
exception to the deduction limit of Section 162(m) of the Code (collectively,
the “Amendments”), such Amendments conditioned upon and not to take effect until
stockholder approval of the Amendments is obtained.

 

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BEA SYSTEMS, INC. 1997 STOCK INCENTIVE PLAN

NOTICE OF RESTRICTED STOCK PURCHASE AWARD

Grantee’s Name and Address:

You (the “Grantee”) have been granted the right to purchase shares of Common
Stock of the Company, subject to the terms and conditions of this Notice of
Restricted Stock Purchase Award (the “Notice”), the BEA Systems, Inc. 1997 Stock
Incentive Plan, as amended from time to time (the “Plan”) and the Restricted
Stock Purchase Award Agreement (the “Agreement”) attached hereto, as follows.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Notice.

Award Number

Date of Award

Vesting Commencement Date

Purchase Price per Share                                         
                $0.01

Total Number of Shares of Common Stock Awarded

Total Purchase Price

Vesting Schedule:

Subject to the Grantee’s Continuous Service and other limitations set forth in
this Notice, the Agreement and the Plan, the Shares will “vest” in accordance
with the following schedule:

100% of the Total Number of Shares of Common Stock Awarded shall vest twelve
(12) months after the Vesting Commencement Date.

During any authorized leave of absence, the vesting of the Shares shall be
suspended after the leave of absence exceeds a period of ninety (90) days.
Vesting of the Shares shall resume upon the Grantee’s termination of the leave
of absence and return to Continuous Service. The Vesting Schedule of the Shares
shall be extended to the length of the suspension.

In the event of the Grantee’s change in status from Employee or Director to
Consultant, the vesting of the Shares shall continue only to the extent
determined by the Administrator as of such change in status consistent with any
minimum vesting requirements set forth in the Plan.

Vesting shall cease upon the date of termination of the Grantee’s Continuous
Service for any reason, including death or Disability. For purposes of this
Notice and the Agreement, the term “vest” shall mean, with respect to any
Shares, that such Shares are no longer subject to repurchase at the Purchase
Price per Share; provided, however, that such Shares shall remain subject to
other restrictions on transfer set forth in the Agreement or the Plan. Shares
that have

 

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not vested are deemed “Restricted Shares.” If the Grantee would become vested in
a fraction of a Restricted Share, such Restricted Share shall not vest until the
Grantee becomes vested in the entire Share. Notwithstanding the foregoing, the
Shares subject to this Notice will be subject to the provisions of the Agreement
and Section 11 of the Plan relating to the release of repurchase and forfeiture
provisions in the event of a Corporate Transaction or Change of Control.

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Award is to be governed by the terms and conditions of this
Notice, the Plan, and the Agreement.

 

BEA Systems, Inc.,

a Delaware corporation

By:

 

 

Title:

 

 

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SHALL VEST, IF AT ALL, ONLY
DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS SERVICE (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS AWARD OR ACQUIRING SHARES HEREUNDER). THE
GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE
AGREEMENT, NOR IN THE PLAN, SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT
TO CONTINUATION OF THE GRANTEE’S CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN
ANY WAY WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE
GRANTEE’S CONTINUOUS SERVICE AT ANY TIME, WITH OR WITHOUT CAUSE, AND WITH OR
WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN
EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE’S STATUS IS
AT WILL.

The Grantee acknowledges receipt of a copy of the Plan and the Agreement and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts the Award subject to all of the terms and provisions hereof and
thereof. The Grantee has reviewed this Notice, the Agreement and the Plan in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Notice and fully understands all provisions of this Notice, the
Agreement and the Plan. The Grantee hereby agrees that all disputes arising out
of or relating to this Notice, the Plan and the Agreement shall be resolved in
accordance with Section __ of the Agreement. The Grantee further agrees to
notify the Company upon any change in the residence address indicated in this
Notice.

 

Dated:                        Signed:  

 

 

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Award Number: 029469

BEA SYSTEMS, INC. 1997 STOCK INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AWARD AGREEMENT

1. Purchase of Shares. BEA Systems, Inc., a Delaware corporation (the
“Company”), hereby issues and sells to the Grantee (the “Grantee”) named in the
Notice of Restricted Stock Purchase Award (the “Notice”), the Total Number of
Shares of Common Stock Awarded set forth in the Notice (the “Shares”) for a
Purchase Price per Share set forth in the Notice (the “Total Purchase Price”),
subject to the Notice, this Restricted Stock Purchase Award Agreement (the
“Agreement”) and the terms and provisions of the Company’s 1997 Stock Incentive
Plan, as amended from time to time (the “Plan”), which is incorporated herein by
reference. Payment for the Shares in the amount of the Total Purchase Price set
forth in the Notice shall be made to the Company upon execution of the Notice.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Agreement. All Shares sold hereunder will be
deemed issued to the Grantee as fully paid and nonassessable shares, and the
Grantee will have the right to vote the Shares at meetings of the Company’s
shareholders. The Company shall pay any applicable stock transfer taxes imposed
upon the issuance of the Shares to the Grantee hereunder.

2. Method of Payment. Payment of the Total Purchase Price shall be by any of the
following, or a combination thereof, at the election of the Grantee; provided,
however, that such payment method does not then violate an Applicable Law and,
provided further, that the portion of the Total Purchase Price equal to the par
value of the Shares must be paid in cash or other legal consideration permitted
by the Delaware General Corporation Law:

(a) cash; or

(b) check.

3. Transfer Restrictions. The Shares sold to the Grantee hereunder may not be
sold, transferred by gift, pledged, hypothecated, or otherwise transferred or
disposed of by the Grantee prior to the date when the Shares become vested
pursuant to the Vesting Schedule set forth in the Notice. Any attempt to
transfer Restricted Shares in violation of this Section 3 will be null and void
and will be disregarded.

4. Escrow of Stock. For purposes of facilitating the enforcement of the
provisions of this Agreement, the Grantee agrees, immediately upon receipt of
the certificate(s) for the Restricted Shares, to deliver such certificate(s),
together with an Assignment Separate from Certificate in the form attached
hereto as Exhibit A, executed in blank by the Grantee and the Grantee’s spouse
(if required for transfer) with respect to each such stock certificate, to the
Secretary or Assistant Secretary of the Company, or their designee, to hold in
escrow for so long as such Restricted Shares have not vested pursuant to the
Vesting Schedule set forth in the Notice, with the authority to take all such
actions and to effectuate all such transfers and/or releases as may be necessary
or appropriate to accomplish the objectives of this Agreement in

 

16

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accordance with the terms hereof. The Grantee hereby acknowledges that the
appointment of the Secretary or Assistant Secretary of the Company (or their
designee) as the escrow holder hereunder with the stated authorities is a
material inducement to the Company to make this Agreement and that such
appointment is coupled with an interest and is accordingly irrevocable. The
Grantee agrees that such escrow holder shall not be liable to any party hereto
(or to any other party) for any actions or omissions unless such escrow holder
is grossly negligent relative thereto. The escrow holder may rely upon any
letter, notice or other document executed by any signature purported to be
genuine and may resign at any time. Upon the vesting of all Restricted Shares,
the escrow holder will, without further order or instruction, transmit to the
Grantee the certificate evidencing such Shares, subject, however, to
satisfaction of any withholding obligations provided in Section 6 below.

5. Distributions. Except as set forth in Section 9(e), the Company shall
disburse to the Grantee all regular cash dividends with respect to the Shares
and Additional Securities (whether vested or not), less any applicable
withholding obligations.

6. Withholding of Taxes. The Grantee shall, as Restricted Shares shall vest or
at the time withholding is otherwise required by any Applicable Law, pay the
Company the amount necessary to satisfy any applicable foreign, federal, state,
and local income and employment tax withholding obligations.

7. Additional Securities. Any securities or cash received (other than a regular
cash dividend) as the result of ownership of the Restricted Shares (the
“Additional Securities”), including, but not by way of limitation, warrants,
options and securities received as a stock dividend or stock split, or as a
result of a recapitalization or reorganization or other similar change in the
Company’s capital structure, shall be retained in escrow in the same manner and
subject to the same conditions and restrictions as the Restricted Shares with
respect to which they were issued, including, without limitation, the Vesting
Schedule set forth in the Notice. The Grantee shall be entitled to direct the
Company to exercise any warrant or option received as Additional Securities upon
supplying the funds necessary to do so, in which event the securities so
purchased shall constitute Additional Securities, but the Grantee may not direct
the Company to sell any such warrant or option. If Additional Securities consist
of a convertible security, the Grantee may exercise any conversion right, and
any securities so acquired shall constitute Additional Securities. Appropriate
adjustments to reflect the distribution of Additional Securities shall be made
to the price per share to be paid upon the exercise of the Repurchase Right in
order to reflect the effect of any such transaction upon the Company’s capital
structure. In the event of any change in certificates evidencing the Shares or
the Additional Securities by reason of any recapitalization, reorganization or
other transaction that results in the creation of Additional Securities, the
escrow holder is authorized to deliver to the issuer the certificates evidencing
the Shares or the Additional Securities in exchange for the certificates of the
replacement securities.

8. Company’s Repurchase Right.

(a) Grant of Repurchase Right. The Company is hereby granted the right (the
“Repurchase Right”), exercisable at any time during the ninety (90) day period
(the “Share Repurchase Period”) following the date the Grantee’s Continuous
Service terminates for any reason, with or without cause (including death or
disability) (the “Termination Date”) to repurchase all or any portion of the
Shares that are deemed Restricted Shares.

 

17

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(b) Exercise of the Repurchase Right. The Repurchase Right shall be exercisable
by written notice delivered to the Grantee prior to the expiration of the Share
Repurchase Period. The notice shall indicate the number of Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not later than the last day of the Share Repurchase Period. On the date on
which the repurchase is to be effected, the Company and/or its assigns shall pay
to the Grantee in cash or cash equivalents (including the cancellation of any
purchase-money indebtedness) the Purchase Price per Share previously paid by the
Grantee to the Company for such Shares. Upon such payment to the Grantee or into
escrow for the benefit of the Grantee, the Company and/or its assigns shall
become the legal and beneficial owner of the Shares being repurchased and all
rights and interest thereon or related thereto, and the Company shall have the
right to transfer to its own name or its assigns the number of Shares being
repurchased, without further action by the Grantee.

(c) Assignment. Whenever the Company shall have the right to purchase Shares
under this Repurchase Right, the Company may designate and assign one or more
employees, officers, directors or shareholders of the Company or other persons
or organizations, to exercise all or a part of the Company’s Repurchase Right.

(d) Termination of the Repurchase Right. The Repurchase Right shall terminate
with respect to any Shares for which it is not timely exercised.

(e) Corporate Transaction. In the event of a Corporate Transaction, this
Agreement shall be subject to accelerated vesting provisions and related
provisions of section 5(4) of the Employment Agreement entered into by Charles
L. Ill, III and the Company dated January 6, 2003.

9. Stop-Transfer Notices. In order to ensure compliance with the restrictions on
transfer set forth in this Agreement, the Notice or the Plan, the Company may
issue appropriate “stop transfer” instructions to its transfer agent, if any,
and, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.

10. Refusal to Transfer. The Company shall not be required (i) to transfer on
its books any Shares that have been sold or otherwise transferred in violation
of any of the provisions of this Agreement or (ii) to treat as owner of such
Shares or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.

11. Restrictive Legends. The Grantee understands and agrees that the Company
shall cause the legend set forth below or a legend substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together with any other legends that may be required by the Company or by state
or federal securities laws:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER, A REPURCHASE RIGHT HELD BY THE ISSUER OR ITS

 

18

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ASSIGNEE(S) AS SET FORTH IN THE RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED
AT THE PRINCIPAL OFFICE OF THE ISSUER SUCH TRANSFER RESTRICTIONS ARE BINDING ON
TRANSFEREES OF THESE SHARES.

12. Entire Agreement: Governing Law. The Notice, the Plan and this Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. These agreements are
to be construed in accordance with and governed by the internal laws of the
State of California without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should
any provision of the Notice or this Agreement be determined by a court of law to
be illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.

13. Headings. The captions used in this Agreement are inserted for convenience
and shall not be deemed a part of this Agreement for construction or
interpretation.

14. Dispute Resolution. The provisions of this Section 17 shall be the exclusive
means of resolving disputes arising out of or relating to the Notice, the Plan
and this Agreement. The Company, the Grantee, and the Grantee’s assignees (the
“parties”) shall attempt in good faith to resolve any disputes arising out of or
relating to the Notice, the Plan and this Agreement by negotiation between
individuals who have authority to settle the controversy. Negotiations shall be
commenced by either party by notice of a written statement of the party’s
position and the name and title of the individual who will represent the party.
Within thirty (30) days of the written notification, the parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to resolve the dispute. If the dispute has not been resolved by
negotiation, the parties agree that any suit, action, or proceeding arising out
of or relating to the Notice, the Plan or this Agreement shall be brought in the
United States District Court for the Northern District of California (or should
such court lack jurisdiction to hear such action, suit or proceeding, in a
California state court in the County of Santa Clara) and that the parties shall
submit to the jurisdiction of such court. The parties irrevocably waive, to the
fullest extent permitted by law, any objection the party may have to the laying
of venue for any such suit, action or proceeding brought in such court. THE
PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF
ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this
Section 17 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions shall be modified to the
minimum extent necessary to make it or its application valid and enforceable.

15. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail

 

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by certified mail (if the parties are within the United States), with postage
and fees prepaid, addressed to the other party at its address as shown in these
instruments, or to such other address as such party may designate in writing
from time to time to the other party.

 

20

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EXHIBIT A

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

[Please sign this document but do not date it. The date and information of the
transferee will be completed if and when the shares are assigned.]

FOR VALUE RECEIVED,                                          hereby sells,
assigns and transfers unto                                     ,
                                 (            ) shares of the Common Stock of
BEA Systems, Inc., a Delaware corporation (the “Company”), standing in his name
on the books of, the Company represented by Certificate No.      herewith, and
does hereby irrevocably constitute and appoint the Secretary of the Company
attorney to transfer the said stock in the books of the Company with full power
of substitution.

 

DATED:                     

 

 

 

 

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LOGO [g41753img004.jpg]

BEA Systems, Inc.

Stock Plan Administration

2315 North First Street

San Jose, CA 95131

Phone: 408-570-8600

FAX: 408-570-8970

Email: stock-admin@bea.com

Dear «FIRST_NAME»,

Congratulations on your Restricted Stock Unit Award!

Below is your Notice of Award and Agreement. The 1997 Stock Incentive Plan is
our current plan and may be located at
http://myhr.beasys.com:7501/hr/stock/forms/plan97.pdf

Please take the following actions:

 

  •   Scroll down to view the Documents. NOTE: A “Frequently Asked Questions”
appears at the end.

 

  •   Print, sign and fax or mail one copy of the Notice of Grant of Stock
Options to 408-570-8970. It is not necessary to overnight or express mail your
agreements to us.

 

  •   Save this email or print a copy of your grant notice and keep for your
file.

 

  •   Read through the Stock Administration internal website at:
http://myhr.beasys.com:7501/hr/stock/index.jsp for more information on stock
options. Be sure to read the “1997 ISO Prospectus” and the “1997 Stock Incentive
Plan” documents from the web site.

 

  •   Note: The name and address on your Notice of Stock Option Grant and
Agreement will be used on future brokerage accounts. Changes to name and
addresses should be updated by using PeopleSoft Self Service. Stock
Administration will be updated accordingly.

 

  •   Brokerage account: BEA has 3 captive brokers to choose from, however, all
employees are initially set up to use ETrade/Optionslink. This allows employees
a place to view their new hire and any subsequent stock option grants. If you
have not already, you will receive an email from Etrade with your user log in
and password. If you would like to choose one of the alternative captive brokers
you may do so during the Captive Broker Selection period, once a quarter
(specific dates are announced in PeopleMatter). For more information on our
Captive Brokers, please refer to the Stock Administration internal website.

IMPORTANT: If your signed Notice is not received by Stock Administration within
60 days from this email distribution, your Stock Option Grant may be cancelled.

Contact Stock Administration if you should have additional questions

 

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BEA SYSTEMS, INC. 1997 STOCK INCENTIVE PLAN

NOTICE OF PERFORMANCE UNIT AWARD

 

Grantee’s Name and Address:   «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»  
«ADDRESS_LINE_1» «ADDRESS_LINE_2»   «CITY», «STATE» «COUNTRY» «ZIP_CODE»  
«EMAIL_ADDRESS»

You (the “Grantee”) have been granted a Performance Unit Award (the “Award”),
subject to the terms and conditions of this Notice of Performance Unit Award
(the “Notice”), the Bea Systems, Inc. 1997 Stock Incentive Plan, as amended from
time to time (the “Plan”) and the Performance Unit Award Agreement (the
“Agreement”) attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice.

 

Award Number   «NUM» Date of Award   «AWARD_DATE» Vesting Commencement Date  
«VEST_BASE_DATE» Total Number of Performance   Units Awarded (the “Units”)  
«SHARES_GRANTED»

Vesting Schedule:

Subject to the Grantee’s Continuous Status as an Employee, Director or
Consultant and other limitations set forth in this Notice, the Agreement and the
Plan, the Units shall vest in accordance with the following schedule:

50% of the Units shall vest twelve (12) months after the Vesting Commencement
Date and the remaining 50% of the Units shall vest twenty-four (24) months after
the Vesting Commencement Date.

In the event of the Grantee’s change in status from Employee to Consultant or
from an Employee whose customary employment is 20 hours or more per week to an
Employee whose customary employment is fewer than 20 hours per week, the Units
shall continue to vest in accordance with the Vesting Schedule.

For purposes of this Notice and the Agreement, the term “vest” shall mean, with
respect to any Units, that such Units are no longer subject to forfeiture to the
Company. If the Grantee would become vested in a fraction of a Unit, such Unit
shall not vest until the Grantee becomes vested in the entire Unit.

Vesting shall cease upon the date of termination of the Grantee’s Continuous
Status as an Employee, Director or Consultant (the “Termination Date”) for any
reason, including death or Disability. In the event the Grantee’s Continuous
Status as an Employee, Director or Consultant is terminated for any reason,
including death or Disability, the unvested portion of the Award shall remain in
effect for a period of one hundred eighty (180) days after the Termination Date
and any unvested Units held by the Grantee immediately following such
termination of Continuous Status as an Employee, Director or Consultant shall be
deemed reconveyed to the Company on the date one hundred eighty (180) days after
the Termination Date and the

 

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Company shall thereafter be the legal and beneficial owner of such Units and
shall have all rights and interest in or related thereto without further action
by the Grantee.

IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
agree that the Award is to be governed by the terms and conditions of this
Notice, the Plan, and the Agreement.

 

BEA Systems, Inc.,

a Delaware corporation

By:  

Mark Dentinger

Title:   Chief Financial Officer

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE UNITS SHALL VEST, IF AT ALL, ONLY
DURING THE PERIOD OF THE GRANTEE’S CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD OR
ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT
NOTHING IN THIS NOTICE, THE AGREEMENT, NOR IN THE PLAN, SHALL CONFER UPON THE
GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF THE GRANTEE’S CONTINUOUS
STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT, NOR SHALL IT INTERFERE IN ANY WAY
WITH THE GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE THE GRANTEE’S
CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT AT ANY TIME, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
THE GRANTEE’S STATUS IS AT WILL.

The Grantee acknowledges receipt of a copy of the Plan and the Agreement and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts the Award subject to all of the terms and provisions hereof and
thereof. The Grantee has reviewed this Notice, the Agreement and the Plan in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Notice and fully understands all provisions of this Notice, the
Agreement and the Plan. The Grantee hereby agrees that all questions of
interpretation and administration relating to this Notice, the Plan and the
Agreement shall be resolved by the Administrator in accordance with Section 9 of
the Agreement. The Grantee further agrees to the venue selection and waiver of a
jury trial in accordance with Section 10 of the Agreement. The Grantee further
agrees to notify the Company upon any change in the residence address indicated
in this Notice.

The Grantee further acknowledges that, from time to time, the Company may be in
a “blackout period” and/or subject to applicable federal securities laws that
could subject the Grantee to liability for engaging in any transaction involving
the sale of the Company’s Shares. The Grantee further acknowledges and agrees
that, prior to the sale of any Shares acquired under this Award, it is the
Grantee’s responsibility to determine whether or not such sale of Shares will
subject the Grantee to liability under insider trading rules or other applicable
federal securities laws.

 

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The Grantee understands that the Award is subject to the Grantee’s consent to
access this Notice, the Agreement, the Plan and the Plan prospectus
(collectively, the “Plan Documents”) in electronic form on the Company’s
intranet. By signing below (or by providing an electronic signature) and
accepting the grant of the Award, the Grantee: (i) consents to access electronic
copies (instead of receiving paper copies) of the Plan Documents via the
Company’s intranet; (ii) represents that the Grantee has access to the Company’s
intranet; (iii) acknowledges receipt of electronic copies, or that the Grantee
is already in possession of paper copies, of the Plan Documents; and
(iv) acknowledges that the Grantee is familiar with and accepts the Award
subject to the terms and provisions of the Plan Documents.

 

Dated:                        Signed:  

 

    «FIRST_NAME» «MIDDLE_NAME» «LAST_NAME»

 

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Award Number: «NUM»

BEA SYSTEMS, INC. 1997 STOCK INCENTIVE PLAN

PERFORMANCE UNIT AWARD AGREEMENT

1. Issuance of Units. BEA Systems, Inc., a Delaware corporation (the “Company”),
hereby issues to the Grantee (the “Grantee”) named in the Notice of Performance
Unit Award (the “Notice”), the Total Number of Performance Units Awarded set
forth in the Notice (the “Units”), subject to the Notice, this Performance Unit
Award Agreement (the “Agreement”) and the terms and provisions of the Company’s
1997 Stock Incentive Plan, as amended from time to time (the “Plan”), which is
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Agreement.

2. Transfer Restrictions. The Units subject to this award (the “Award”) may not
be transferred in any manner other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, the Grantee may designate a
beneficiary of the Units in the event of the Grantee’s death on the beneficiary
designation form attached hereto as Exhibit A. The terms of this Agreement shall
be binding upon the executors, administrators, heirs, successors and transferees
of the Grantee.

3. Conversion of Units and Issuance of Shares. Upon each vesting date, one share
of Common Stock shall be issuable for each Unit that vests on such date (the
“Shares”), subject to the terms and provisions of the Plan and this Agreement.
Thereafter, the Company will transfer such Shares to the Grantee upon
satisfaction of any required tax or other withholding obligations. Any
fractional Unit remaining after the Award is fully vested shall be discarded and
shall not be converted into a fractional Share.

4. Corporate Transaction.

(a) Corporate Transaction. In the event of a Corporate Transaction and:

(i) for the portion of the Award that is Assumed or Replaced, then the Award (if
Assumed), the replacement award (if Replaced), or the cash incentive program (if
Replaced) automatically shall become fully vested, exercisable and payable for
all of the Units at the time represented by such Assumed or Replaced portion of
the Award, immediately upon termination of the Grantee’s Continuous Status as an
Employee, Director or Consultant if such Continuous Status as an Employee,
Director or Consultant is terminated by the Company or a Parent or Subsidiary of
the Company without Cause within twelve (12) months after the Corporate
Transaction or voluntarily by the Grantee with Good Reason within twelve
(12) months after the Corporate Transaction; and

(ii) for the portion of the Award that is neither Assumed nor Replaced, such
portion of the Award shall automatically become fully vested with respect to all
of the Units at the time represented by such portion of the Award, immediately
prior to the specified effective date of such Corporate Transaction, provided
that the Grantee’s Continuous Status as an Employee, Director or Consultant has
not terminated prior to such date.

 

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(iii) In the event of a Corporate Transaction, all references to the Company
shall be deemed to refer to the successor entity, if applicable.

(b) Termination of Continuous Status as an Employee, Director or Consultant
Prior to a Corporate Transaction. Notwithstanding anything in this Agreement to
the contrary, in the event the Grantee’s Continuous Status as an Employee,
Director or Consultant is terminated and a Corporate Transaction occurs within
one hundred eighty (180) days after the date of such termination, then the Award
automatically shall become fully vested with respect to all of the Units at the
time represented by the Award, immediately prior to the specified effective date
of such Corporate Transaction provided that it is reasonably demonstrated by the
Grantee that such termination of Continuous Status as an Employee, Director or
Consultant (i) was at the request of a third party that has taken steps
reasonably calculated to effect such Corporate Transaction or (ii) otherwise
arose in connection with or anticipation of such Corporate Transaction.

(c) Definitions. Notwithstanding any definitions set forth in the Plan, the
following definitions shall apply:

(i) “Assumed” means that pursuant to a Corporate Transaction either (A) the
Award is expressly affirmed by the Company or (B) the contractual obligations
represented by the Award are expressly assumed (and not simply by operation of
law) by the successor entity or its Parent in connection with the Corporate
Transaction with appropriate adjustments to the number and type of securities of
the successor entity or its Parent subject to the Award which at least preserve
the compensation element of the Award existing at the time of the Corporate
Transaction as determined in accordance with the instruments evidencing the
agreement to assume the Award.

(ii) “Replaced” means that pursuant to a Corporate Transaction the Award is
replaced with a comparable stock award or a cash incentive program of the
Company or its Parent which at least preserves the compensation element of such
Award existing at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same (or a more favorable) vesting
schedule applicable to such Award. The determination of Award comparability
shall be made by the Administrator and its determination shall be final, binding
and conclusive.

(iii) “Cause” means:

(A) the willful and continued failure of the Grantee to perform substantially
the Grantee’s duties with the Company or any Parent or Subsidiary of the Company
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Grantee by the Board or the Chief Executive Officer of the Company that
specifically identifies the manner in which the Board or the Chief Executive
Officer of the Company believes that the Grantee has not substantially performed
the Grantee’s duties, or

 

27

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(B) the willful engaging by the Grantee in illegal conduct or gross misconduct
that is materially and demonstrably injurious to the Company.

For purposes of this Section 4, no act, or failure to act, on the part of the
Grantee shall be considered “willful” unless it is done, or omitted to be done,
by the Grantee in bad faith or without reasonable belief that the Grantee’s
action or omission was in the best interests of the Company. Any act, or failure
to act, based upon authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of the Chief Executive Officer of the Company or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Grantee in good faith and in the best interests of the Company. The termination
of the Grantee’s Continuous Status as an Employee, Director or Consultant shall
not be deemed to be for Cause unless and until there shall have been delivered
to the Grantee a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Board (excluding
the Grantee, if the Grantee is a member of the Board) at a meeting of the Board
called and held for such purpose (after reasonable notice is provided to the
Grantee and the Grantee is given an opportunity, together with counsel for the
Grantee, to be heard before the Board), finding that, in the good faith opinion
of the Board, the Grantee is guilty of the conduct described in
Section 4(c)(iii)(A) or 4(c)(iii)(B), and specifying the particulars thereof in
detail.

(iv) “Corporate Transaction” means:

(A) the approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company;

(B) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either (i) the then-outstanding shares of common stock of the
Company (the “Outstanding Company Common Stock”) or (ii) the combined voting
power of the then-outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this Section 4, the
following acquisitions shall not constitute a Corporate Transaction: (a) any
acquisition directly from the Company, (b) any acquisition by the Company,
(c) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any company controlled by, controlling or under
common control with the Company or (d) any acquisition by any corporation
pursuant to a transaction that complies with Sections 4(c)(iv)(C)(i),
4(c)(iv)(C)(ii) and 4(c)(iv)(C)(iii) below;

(C) the consummation of a reorganization, merger, statutory share exchange or
consolidation or similar corporate transaction involving the Company or any of
its Subsidiaries, a sale or other disposition of all or substantially all of the
assets of the Company, or the acquisition of assets or stock of another entity
by the Company or any of its Subsidiaries (each, a “Business Combination”), in
each case unless, following such Business Combination, (i) all or substantially
all of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or

 

28

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indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership
immediately prior to such Business Combination of the Outstanding Company Common
Stock and the Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any corporation resulting from such Business Combination or
any employee benefit plan (or related trust) of the Company or such corporation
resulting from such Business Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination or the
combined voting power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior to the
Business Combination, and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were
members of the Incumbent Board at the time of the execution of the initial
agreement or of the action of the Board providing for such Business Combination;
or

(D) individuals who, as of the Date of Award, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the Date of Award whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.

(v) “Good Reason” means:

(A) the assignment to the Grantee of any duties inconsistent in any respect with
the Grantee’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities immediately prior to the
Corporate Transaction, or any other diminution in such position, authority,
duties or responsibilities (whether or not occurring solely as a result of the
Company’s ceasing to be a publicly traded entity), excluding for this purpose an
isolated, insubstantial and inadvertent action not taken in bad faith and that
is remedied by the Company promptly after receipt of notice thereof given by the
Grantee;

(B) a reduction in the Grantee’s base salary to a level below that in effect at
any time within six (6) months preceding the consummation of a Corporate
Transaction or at any time thereafter; provided that an across-the-board
reduction in the salary level of substantially all other individuals in
positions similar to the Grantee’s by the same percentage amount shall not
constitute such a salary reduction; and

 

29

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(C) the Company’s requiring the Grantee (i) to be based at any office or
location outside a 55-mile radius from the Grantee’s job location immediately
prior to the Corporate Transaction, or (iii) to travel on Company business to a
substantially greater extent than required immediately prior to the Corporate
Transaction.

For purposes of this Section 4, any good faith determination of Good Reason made
by the Grantee shall be conclusive. The Grantee’s mental or physical incapacity
following the occurrence of an event described above in clauses (A) through
(C) shall not affect the Grantee’s ability to terminate Continuous Status as an
Employee, Director or Consultant for Good Reason.

5. Right to Shares. The Grantee shall not have any right in, to or with respect
to any of the Shares (including any voting rights or rights with respect to
dividends paid on the Common Stock) issuable under the Award until the Award is
settled by the issuance of such Shares to the Grantee.

6. Taxes.

(a) Generally. The Grantee is ultimately liable and responsible for all taxes
owed by the Grantee in connection with the Award, regardless of any action the
Company or any Subsidiary of the Company takes with respect to any tax
withholding obligations that arise in connection with the Award. Neither the
Company nor any Subsidiary of the Company makes any representation or
undertaking regarding the treatment of any tax withholding in connection with
the grant or vesting of the Award or the subsequent sale of Shares issuable
pursuant to the Award. The Company and its Subsidiaries do not commit and are
under no obligation to structure the Award to reduce or eliminate the Grantee’s
tax liability. As a condition and term of this Award, no election under
Section 83(b) of the Code may be made by the Grantee or any other person with
respect to all or any portion of the Award.

(b) Payment of Withholding Taxes. Prior to any event in connection with the
Award (e.g., vesting) that the Company determines may result in any tax
withholding obligation, whether non-U.S., federal, state or local, including any
employment tax obligation (the “Tax Withholding Obligation”), the Grantee must
arrange for the satisfaction of the minimum amount of such Tax Withholding
Obligation in a manner acceptable to the Company.

(i) By Share Withholding. Unless the Company determines to satisfy the Tax
Withholding Obligation in accordance with clause (ii) below, the Company shall
withhold from those Shares issuable to the Grantee the whole number of Shares
sufficient to satisfy the minimum applicable Tax Withholding Obligation. The
Grantee acknowledges that the withheld Shares may not be sufficient to satisfy
the Grantee’s minimum Tax Withholding Obligation. Accordingly, the Grantee
agrees to pay to the Company or any Subsidiary of the Company as soon as
practicable, including through additional payroll withholding, any amount of the
Tax Withholding Obligation that is not satisfied by the withholding of Shares
described above.

(ii) By Sale of Shares. The Grantee’s acceptance of this Award constitutes the
Grantee’s authorization to the Company and any brokerage firm determined
acceptable to the Company for such purpose to sell on the Grantee’s behalf a
whole number of

 

30

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Shares from those Shares issuable to the Grantee as the Company determines to be
appropriate to generate cash proceeds sufficient to satisfy the minimum
applicable Tax Withholding Obligation. Such Shares will be sold on the day such
Tax Withholding Obligation arises (e.g., a vesting date) or as soon thereafter
as practicable. The Grantee will be responsible for all broker’s fees and other
costs of sale, and the Grantee agrees to indemnify and hold the Company harmless
from any losses, costs, damages, or expenses relating to any such sale. To the
extent the proceeds of such sale exceed the Grantee’s minimum Tax Withholding
Obligation, the Company agrees to pay such excess in cash to the Grantee. The
Grantee acknowledges that the Company or its designee is under no obligation to
arrange for such sale at any particular price, and that the proceeds of any such
sale may not be sufficient to satisfy the Grantee’s minimum Tax Withholding
Obligation. Accordingly, the Grantee agrees to pay to the Company or any
Subsidiary of the Company as soon as practicable, including through additional
payroll withholding, any amount of the Tax Withholding Obligation that is not
satisfied by the sale of Shares described above. The sale of Shares may be used
by the Company, in the exercise of its discretion (subject to Applicable Laws),
to satisfy the minimum Tax Withholding Obligation of the Grantee.

7. Entire Agreement: Governing Law. The Notice, the Plan and this Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee’s interest except by
means of a writing signed by the Company and the Grantee. These agreements are
to be construed in accordance with and governed by the internal laws of the
State of California without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should
any provision of the Notice or this Agreement be determined to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.

8. Construction. The captions used in the Notice and this Agreement are inserted
for convenience and shall not be deemed a part of the Agreement for construction
or interpretation. Except when otherwise indicated by the context, the singular
shall include the plural and the plural shall include the singular. Use of the
term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.

9. Administration and Interpretation. Any question or dispute regarding the
administration or interpretation of the Notice, the Plan or this Agreement shall
be submitted by the Grantee or by the Company to the Administrator. The
resolution of such question or dispute by the Administrator shall be final and
binding on all persons.

10. Venue and Waiver of Jury Trial. The Company, the Grantee, and the Grantee’s
assignees pursuant to Section 2 (the “parties”) agree that any suit, action, or
proceeding arising out of or relating to the Notice, the Plan or this Agreement
shall be brought in the United States District Court for the Northern District
of California (or should such court lack jurisdiction to hear such action, suit
or proceeding, in a California state court in the County of San Francisco) and
that the parties shall submit to the jurisdiction of such court. The parties
irrevocably waive, to the fullest extent permitted by law, any objection the
party may have to the laying of venue for

 

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any such suit, action or proceeding brought in such court. THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 10
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

11. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such
other address as such party may designate in writing from time to time to the
other party.

12. Data Privacy. The Grantee hereby explicitly and unambiguously consents to
the collection, use and transfer, in electronic or other form, of the Grantee’s
personal data as described in this Agreement by and among, as applicable, the
Grantee’s employer, the Company, its Subsidiaries and its affiliates for the
exclusive purpose of implementing, administering and managing the Grantee’s
participation in the Plan. The Grantee understands that the Company and the
Grantee’s employer may hold certain personal information about the Grantee,
including, but not limited to, the Grantee’s name, home address and telephone
number, date of birth, social security/insurance number or other identification
number, salary, nationality, job title, any shares of Common Stock or
directorships held in the Company, details of all awards or any other
entitlement to shares awarded, canceled, vested, unvested or outstanding in the
Grantee’s favor, for the purpose of implementing, administering and managing the
Plan (“Data”). The Grantee understands that Data may be transferred to any third
parties assisting in the implementation, administration and management of the
Plan, that these recipients may be located in the Grantee’s country, or
elsewhere, and that the recipient’s country may have different data privacy laws
and protections than the Grantee’s country. The Grantee understands that the
Grantee may request a list with the names and addresses of any potential
recipients of the Data by contacting the Grantee’s local human resources
representative. The Grantee authorizes the recipients to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Grantee’s participation in the
Plan, including any requisite transfer of such Data as may be required to a
broker, escrow agent or other third party with whom the Shares received upon
vesting of the Units may be deposited. The Grantee understands that Data will be
held only as long as is necessary to implement, administer and manage the
Grantee’s participation in the Plan. The Grantee understands that the Grantee
may, at any time, view Data, request additional information about the storage
and processing of Data, require any necessary amendments to Data or refuse or
withdraw the consents herein, in any case without cost, by contacting in writing
the Grantee’s local human resources representative. The Grantee understands that
refusal or withdrawal of consent may affect the Grantee’s ability to participate
in the Plan. For more information on the consequences of the Grantee’s refusal
to consent or withdrawal of consent, the Grantee understands that the Grantee
may contact the Grantee’s local human resources representative.

END OF AGREEMENT

 

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EXHIBIT A

BEA SYSTEMS, INC.

Performance Unit Beneficiary Designation

In the event of my death prior to the settlement of my currently outstanding or
subsequently issued Performance Units (the “Units”) under any existing or
subsequently adopted stock incentive plan of BEA Systems, Inc. or its successor
in interest (the “Company”) (whether adopted by the Company or assumed by the
Company in connection with a merger, acquisition or other similar transaction)
or issued to me by the Company outside of any such stock plan, and in lieu of
disposing of my interest,1 if any, in the Units at the time of my death by my
will or the laws of intestate succession, I hereby designate the following
persons as Primary Beneficiary(ies) and Contingent Beneficiary(ies) of my
interest in the Units:

 

 

   Primary Beneficiary(ies) (Select only one of the three alternatives)       ¨
(a) Individuals and/or Charities    %
Share 1)    Name                                         
                                        
                                                         _______    Address
                                        
                                        
                                                 2)    Name
                                        
                                        
                                                         _______    Address
                                        
                                        
                                                    ¨ (b) Residuary Testamentary
Trust       In trust, to the trustee of the trust named as the beneficiary of
the residue of my probate estate.       ¨ (c) Living Trust      
                                                                          (or
any successor), as Trustee of the                   (print name of present
trustee)                                             
                                   Trust, dated
                                                                               
            (print name of trust)                                         
                    (fill in date trust was established)   

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

1 A married grantee whose Units are community property may dispose only of his
or her own interest in the Units. In such cases, the grantee’s spouse may
(a) consent to the grantee’s designation by signing the Spousal Consent or
(b) designate the grantee or any other person(s) as the beneficiary(ies) of his
or her interest in the Units on a separate Beneficiary Designation.

 

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   Contingent Beneficiary(ies) (Select only one of the three alternatives)      
¨ (a) Individuals and/or Charities    %
Share 1)    Name                                         
                                                                     _________
   Address                                         
                                                                         2)   
Name                                         
                                                                     _________
   Address                                         
                                                                            ¨
(b) Residuary Testamentary Trust       In trust, to the trustee of the trust
named as the beneficiary of the residue of my probate estate.       ¨ (c) Living
Trust                                             
                                            (or any successor), as Trustee of
the                       (print name of present trustee)      
                                                                             
Trust, dated                                         
                                                               (print name of
trust)                                                          (fill in date
trust was established)   

Should all the individual Primary Beneficiary(ies) fail to survive me or if the
trust named as the Primary Beneficiary does not exist at my death (or no will of
mine containing a residuary trust is admitted to probate within six months of my
death), the Contingent Beneficiary(ies) shall be entitled to my interest in the
Units for the shares indicated. Should any individual beneficiary fail to
survive me or a charity named as a beneficiary no longer exist at my death, such
beneficiary’s share shall be divided among the remaining named Primary or
Contingent Beneficiaries, as appropriate, in proportion to the percentage shares
I have allocated to them. In the event that no Individual Primary
Beneficiary(ies) or Contingent Beneficiary(ies) survives me, no trust (excluding
a residuary testamentary trust) or charity named as a Primary Beneficiary or
Contingent Beneficiary exists at my death, and no will of mine containing a
residuary trust is admitted to probate within six months of my death, then my
interest in the Units shall be disposed of by my will or the laws of intestate
succession, as applicable.

This Beneficiary Designation is effective regardless of whether I have deferred
receipt of any or all of the Units. This Beneficiary Designation is effective
until I file another such designation with BEA Systems, Inc. Any previous
Beneficiary Designations are hereby revoked.

 

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Submitted by:   Accepted by: ¨ Grantee             ¨ Grantee’s Spouse   BEA
Systems, Inc.

 

(Signature)

 

By:

 

 

 

  Its:  

 

Date:                        Date:                     

Spousal Consent for Units that are Community Property (necessary if separate
beneficiary designation is not filed by Spouse):

I hereby consent to this Beneficiary Designation and agree that this designation
of beneficiaries provided herein shall apply to my community property interest
in the Units. This consent does not apply to any subsequent Beneficiary
Designation which may be filed by my spouse. This consent may be revoked by me
at any time, whether by filing a Beneficiary Designation disposing of my
interest in the Units or by filing a written notice of revocation with the
Company.

 

 

(Signature of Spouse)

Date:                     

Spousal Consent for Units that are not Community Property (necessary if
beneficiary is other than Spouse):

I hereby consent to this Beneficiary Designation. This consent does not apply to
any subsequent Beneficiary Designation which may be filed by my spouse.

 

 

(Signature of Spouse)

Date:                     

 

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Restricted Stock Units – Frequently Asked Questions

 

1) What is a Restricted Stock Unit? A Restricted Stock Unit is a promise to
issue stock in the future. The stock is not issued or outstanding until both the
vesting and the release of the shares have occurred. Vesting and release can
occur at the same time or at different times, however, at BEA the vesting and
release will be at the same time – 2 cliff vest dates, 50% at each 12-month
anniversary. At BEA, one Unit is defined as one share of common stock.

 

2) What is the difference between Restricted Stock and a Restricted Stock Unit?
The primary differences are related to timing. With Restricted Stock Awards, the
stock is issued at the time of grant and held in escrow until it is vested.
Ownership and dividend rights occur at the time of grant. The taxation of
Restricted Stock may occur at time of grant or upon vest – at the employee’s
determination. The employee may choose to take the tax hit at the time of grant
by filing an 83(b) election and paying the related taxes. This election is risky
and there is no relief if the employee leaves prior to the vesting. If the
election is not timely filed, then the tax liability will occur at the time of
vesting. In addition, there is a risk of forfeiture until the vesting period has
lapsed.

By comparison, when an employee receives a Restricted Stock Unit award, the
stock is not issued or held until the vest/release date. Consequently, it is the
vest/release of the shares, which triggers the tax liability as well as the
ownership and dividend rights. Restricted Stock Units are more simplified from a
tax impact because the liability will only occur when the stock is delivered and
recipients do not have to take the risk of choosing the tax event date.

 

3) How does the Restricted Stock Unit work? In the most simplified terms, the
RSU will work as follows: 1) The Restricted Stock Unit is awarded to the
employee who signs and returns the agreement to Stock Admin. 2) One year later,
on the first anniversary of the award date, 50% of the shares will be released
to the employee upon payment of the tax liability. 3) The employee now has
ownership rights and the capital gains holding period begins for the first 50%
of the award. If the employee leaves prior to the vest date, no shares are
released. 4) On the 2nd anniversary, the remaining 50% of shares are released -
following the payment of the tax liability. If the employee leaves the company
prior to the vest date, then the shares are not released.

 

4) Am I required to sign and return the Restricted Stock Unit Agreement? Yes,
all employees are required to sign and return to Stock Administration. The
signed agreement may be faxed or mailed; however, it is not necessary to send
via priority or overnight mail delivery.

 

5) Do I have to pay for the stock? No, there is no price per share. The only
payment due upon vest/release date of the stock is the taxes.

 

6) What is the tax impact of the RSU? Ordinary income taxes are due on the day
of vesting. The liability is equal to the fair market value on the date of vest,
times the number of shares vested. The taxes are due on this day - no exceptions
permitted. (See the attached examples.) The holding period for Long-Term Capital
Gains treatment begins with the issuance of the stock.

 

7) Can I choose how and when to pay the taxes? No, the total amount due for
taxes will be settled by a forced sale of the stock on the day of vest. Stock
Administration will work with the broker to ensure that the correct numbers of
shares necessary are sold. Employees will have the remaining shares deposited
into their account.

 

8) Will I be required to hold the shares for a specified period of time? No, BEA
does not place holding requirements on the stock once the tax liabilities are
settled. The remaining stock may be held or sold at the employee’s discretion.

 

9) Will I have access to the view the RSU on-line? Yes, the RSU will be visible
on-line through Etrade only. This broker is the only one with the capability to
show these awards. You may also request a copy of your statement from Stock
Administration.

 

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10) When will I receive the stock? The stock will be released to your captive
broker as soon as it has vested. The award will vest in two separate cliff
increments, 50% on each of two 12-month anniversaries.

EXAMPLE

 

FACTS:

 

RSU Award: 15,000

Date of Award: November 16, 2004

Cost per Unit: $0.00

Tax Rate Assessed*: 40%

 

1st Vest Date: November 16, 2005

Vest Amount (50%): 7,500

Market Value*: $9.00

 

2nd Vest Date: November 16, 2006

Vest Amount (50%) = 7,500

Market Value*: $10.00

___________

*  for illustration purposes only

  

Tax Effect 1st Vest Date:

 

    November 16, 2005            RSUs Released = 7,500

 

Calculation of Ordinary Income:

 

    7,500 * $9.00 = $67,500.

    Ordinary Income $67,500.

    Taxes* @ 40% = $27,000.

    Net Gain: $67,500 – $27,000 = $40,500

 

Calculation of Shares Sold:

 

    Total Tax Liability: $27,000

    $27,000 / $9.00 = 3,000 (rounded down)

    (liability / market value = shares sold)

 

Net Impact

 

    Shares released: 7,500 – 3,000 = 4,500

    Net Value of Released RSUs: 4,500 * $9.00 = $40,500

    Total Value Shares Sold: 3,000 * $9.00 = $27,000

 

Tax Effect 2nd Vest Date:

 

    November 16, 2006            RSUs Released = 7,500

 

Calculation of Ordinary Income:

 

    7,500 * $10.00 = $75,000.

    Ordinary Income $75,000.

    Taxes @ 40% = $30,000.

    Net Gain: $75,000 – $30,000 = $45,000.

 

Calculation of Shares Sold:

 

    Total Tax Liability: 30,000.

    $30,000 / $10.00 = 3,000 (rounded down)

    (liability/market value = shares sold)

 

Net Impact

 

Shares released: 7,500 – 3000 = 4,500

Net Value of Released RSUs: 4,500 * $10.00 = $45,000.

Total Value Shares Sold: 3,000 * $10.00 = $30,000

 

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LOGO [g41753image1.jpg]

BEA Systems, Inc.

Stock Plan Administration

2315 North First Street

San Jose, CA 95131

Phone: 408-570-8600

FAX: 408-570-8970

Dear «FIRST_NAME»,

Congratulations on your Stock Option Award!

BEA now offers employees on-line viewing and acceptance of Stock Options using
E*Trade’s On-Line Acceptance system. You must have an activated E*Trade account
in order to view and accept your stock option on-line.

Alternatively, you may review, print, sign and fax the Notice of Stock Option
Grant and Agreement according to the instructions towards the bottom of this
page.

To activate your E*Trade account now:

 

  •   Go to www.etrade.com/stockplans and select “Get started by activating your
account”. Follow the online instructions that will guide you through the steps
to activate your account. You may have to create a new Authentication Code so if
you have misplaced or never received your Authentication Code, please request a
new Authentication Code by clicking on “Need a new authentication code?”. Once
you have activated your account you will have 24/7 access to view and accept
future stock option awards, view and trade ESPP shares deposited with E*Trade,
and exercise your stock options online. Certain restrictions may apply subject
to local laws.

To accept your stock option on-line:

 

  •   Log in to E*Trade’s website at www.etrade.com and click on the Accounts
tab at the top of the page (if not already chosen for you). Then click on Stock
Plan (BEAS). See this outlined below in red on the screen shot. This will
display your stock options awarded to you and you will see the stock option that
states “Requires Acceptance”, click on this link. You have to open and all
documents included in the grant package to successfully accept your stock
option.

 

  •   By accepting this agreement on-line, you and BEA agree that this award is
granted under and governed by the terms and conditions of the 1997 Stock
Incentive Plan (France Sub-Plan), as amended, and the Stock Option Award
Agreement, both of which are made a part of the online documentation and this
email notification.

LOGO [g41753img002.jpg]

To FAX in your acceptance of this stock option please take the following
actions:

 

  •   PRINT, SIGN, and FAX a copy of the Notice of Stock Option Grant and
Agreement to 1-408-570-8970.

IF YOU HAVE ANY QUESTIONS PLEASE DIRECT THEM TO:

EMAIL: STOCK-ADMIN@BEA.COM                     
                                            PHONE: 1-408-570-8600

 

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LOGO [g41753img003.jpg]

BEA Systems, Inc.

Stock Plan Administration

2315 North First Street

San Jose, CA 95131

Phone: 408-570-8600

FAX: 408-570-8970

Email: stock-admin@bea.com

NOTICE OF GRANT OF STOCK OPTIONS

AND OPTION AGREEMENT

«FIRST_NAME» «LAST_NAME»

«ADDRESS_LINE_1» «ADDRESS_LINE_2»

«ADDRESS_LINE_3»

«CITY», «STATE» «ZIP_CODE»

«COUNTRY»

«EMAIL_ADDRESS»

Option Number: «NUM»

Plan: 1997

Effective, «OPTION_DATE» you have been granted a Non-Qualified Stock Option to
buy «SHARES_GRANTED» shares of BEA Systems, Inc. common stock at $«OPTION_PRICE»
per share.

The total option price of the shares granted is $«TOTAL_OPTION_PRICE».

Twenty-five percent (25%) of the Total Shares will vest and may be exercised on
the first anniversary date (the vest type below “On Vest Date”) of the Grant
Date and, thereafter, an additional 1/48th of the Total Shares shall vest
monthly and may be exercised upon each of the 36 monthly anniversaries (the vest
type below “Monthly”). This described below:

 

Shares

  

Vest Type

  

Full Vest

  

Expiration

«SHARES_PERIOD_1»

   «VEST_TYPE_PERIOD_1»    «VEST_DATE_PERIOD_1»    «EXPIRATION_DATE_PERIOD_1»

«SHARES_PERIOD_2»

   «VEST_TYPE_PERIOD_2»    «VEST_DATE_PERIOD_2»    «EXPIRATION_DATE_PERIOD_2»

By your signature below, you and BEA agree that these options are granted under
and governed by the terms and conditions of the BEA 1997 Stock Incentive Plan
and the Option Agreement. The Option Agreement is a part of your Grant Notice
package and the 1997 Stock Incentive Plan is located on the Stock Administration
web site located at: http://myhr.beasys.com:7501/hr/stock/index.jsp.

Please print one copy of this agreement, sign and fax back to Stock
Administration within 60 days of receipt of this Notice to 408/570-8970.

 

 

   

 

«FIRST_NAME» «LAST_NAME»

    «OPTION_DATE»

 

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BEA SYSTEMS, INC. 1997 STOCK INCENTIVE PLAN STOCK OPTION AGREEMENT

Grant of Option. BEA grants to the Optionee the Option as set forth in the
Notice. If designated in the Notice as an Incentive Stock Option (“ISO”), the
Option is intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code. Nevertheless, to the extent that it exceeds the
$100,000 rule of Section 422(d) of the Code, the Option shall be treated as a
Non-Qualified Stock Option.

Exercise of Option.

Right to Exercise. The Option shall be exercisable during its term in accordance
with the Vesting Schedule set out in the Notice. The Option shall be subject to
the provisions of Section 11 of the Plan relating to the exercisability or
termination of the Option in the event of a Corporate Transaction, Change in
Control or Subsidiary Disposition. No partial exercise of the Option may be for
less than 5 percent of the Number of Shares subject to the option or the
remaining Number of Shares subject to the Option. In no event shall the Company
issue fractional Shares. The number of Shares exercisable on a given day is the
total number of Shares vested on that day less the total number of Shares
previously exercised.

Method of Exercise. The Option shall be exercisable only by delivery of an
Exercise Form (available on BEA’s Internal Web - Administration, Stock
Information, Employee Stock Option Plan). The Exercise Form shall be signed by
the Optionee and delivered to the person indicated on the Exercise Form
accompanied by payment, when appropriate, of the Exercise Price.

Taxes. No Shares will be issued to the Optionee or other person pursuant to the
exercise of the Option until the Optionee or other person has made arrangements
acceptable to the Administrator for the satisfaction of foreign, federal, state
and local income and employment tax withholding obligations, if any.

Method of Payment. Payment of the Exercise Price shall be in U.S. dollars to BEA
by any of the following, or a combination thereof, at the election of the
Optionee; provided, however, that such exercise method does not then violate an
Applicable Law: personal check, bank draft, postal or express money order, or a
same-day sale exercise through Alex. Brown & Sons or other brokerage firm
determined by the Administrator.

Change in Relationship.

Leave of Absence. During any authorized leave of absence, the vesting of the
Option as provided in the Vesting Schedule shall cease after the leave of
absence exceeds 90 days. Vesting of the Option shall resume upon the Optionee’s
termination of the leave and return to service with BEA or a Related Entity.
Notwithstanding the forgoing two sentences, during any authorized Personal Leave
of Absence the vesting of the Option as provided in the Vesting Schedule shall
cease upon the Optionee’s start of such leave and shall resume upon the
termination of such leave and the Optionee’s return to service with BEA or a
Related Entity, and no credit shall be given for any time that would otherwise
have contributed to vesting during such leave. The policies and practices
contained in this document may not conflict with statutory requirements in any
country to which an employee is assigned. In the event of a conflict,
host-country statutory requirements will prevail. Situations not specifically
included in these guidelines will be treated according to local custom and
competitive practice.

Change in Status. In the event of the Optionee’s change in status from Employee
to Consultant or Consultant to Employee, the Option shall remain in effect.
However, when the change in status is from Employee to Consultant, the vesting
of the Option shall continue only to the extent determined by the Administrator
and the Optionee’s Incentive Stock Option shall cease to be treated as an
Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on
the day 3 months and one day following such change in status.

Termination. In the event the Optionee’s Continuous Status as an Employee,
Director or Consultant terminates for reasons other than disability or death,
the Optionee may, to the extent otherwise so entitled at the date of such
termination (the “Termination Date”), exercise the Option within 3 months from
the Termination Date (but in no event later than the Expiration Date).

Disability. In the event the Optionee’s Continuous Status as an Employee,
Director or Consultant terminates as a result of his or her disability, the
Optionee may, but only within 12 months from the Termination Date (and in no
event later than the Expiration Date), exercise the Option to the extent
otherwise entitled to exercise it on the Termination Date; provided, however,
that if such disability is not a “disability” as defined in Section 22(e)(3) of
the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day 3 months and one day
following the Termination Date.

Death. In the event of the Optionee’s death, the Option may be exercised at any
time within 12 months following the date of death (and in no event later than
the Expiration Date), by the Optionee’s estate or by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
the Optionee could exercise the Option at the date of death. In addition, for
Options granted after February 1, 2002, if the Optionee’s death is a result of
an incident that is work related, whereas “work related” encompasses business
travel and the performance of one’s duties in a business setting, any unvested
shares as of the date of Death will be accelerated to fully vested status. In
cases where it is unclear whether an incident is work related, the final
determination will be made by the Board of Directors.

Term of Option. The Option may be exercised no later than the Expiration Date
set forth in the Notice. To the extent that the Optionee was not entitled to
exercise the Option on the Termination Date or on the date of death, or if the
Option is not exercised within the time specified above, the Option shall
terminate.

 

40

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Transferability of Option. The Option, if an Incentive Stock Option, may not be
transferred in any manner other than by will or by the laws of descent or
distribution and may be exercised during the lifetime of the Optionee only by
the Optionee. The Option, if a Non-Qualified Stock Option, may be transferred by
the Optionee in a manner and to the extent acceptable to the Administrator as
evidenced by a writing signed by BEA and the Optionee. The terms of the Option
shall be binding upon the executors, administrators, heirs and successors of the
Optionee.

Interpretation. Any dispute regarding the interpretation of the Notice, the
Plan, and this Option Agreement shall be submitted by the Optionee or by BEA to
the Board or the Administrator that administers the Plan, which shall review
such dispute at its next regular meeting. The resolution of such dispute by the
Board or the Administrator shall be final and binding on all persons.

No Effect on Employment or Consultancy. The vesting of Shares is earned only by
continuing employment or consultancy at the will of BEA (not through being
hired, being granted the Option or acquiring Shares). Nothing in the Notice,
Option Agreement or the Plan shall confer upon the Optionee any right with
respect to continuation of employment or consultancy by BEA, nor shall it
interfere in any way with the Optionee’s right or BEA’s right to terminate the
Optionee’s employment or consultancy at any time, with or without cause.

Entire Agreement: Governing Law. The Notice, the Plan, and this Option Agreement
constitute the entire agreement of the parties with respect to the subject
matter and supersede in their entirety all prior undertakings and agreements of
BEA and the Optionee with respect to the subject matter in the Agreement, and
may not be modified adversely to the Optionee’s interest except by means of a
writing signed by BEA and the Optionee. These instruments are governed by
California law except for that body of law pertaining to conflict of laws.

 

41