Exhibit 10.12

 

LOAN AGREEMENT

 

THIS AMENDED AND RESTATED LOAN AGREEMENT (“Agreement”) is made and entered into
as of July 1, 2002 by and between Embarcadero Technologies, Inc., a California
corporation (“Borrower”), and UNION BANK OF CALIFORNIA, N.A., a national banking
association (“Bank”). This Agreement amends and restates in its entirety that
certain loan agreement dated as of July 31, 2001 by and between Borrower and
Bank.

 

SECTION 1. THE CREDIT

 

1.1 CREDIT FACILITIES

 

1.1.1 The Revolving Loan. Bank will loan to Borrower an amount not to exceed
Three Million Dollars ($3,000,000.00) outstanding in the aggregate at any one
time (the “Revolving Loan”). The proceeds of the Revolving Loan shall be used
for Borrower’s general working capital purposes. Borrower may borrow, repay and
reborrow all or part of the Revolving Loan in accordance with the terms of the
Revolving Note (defined below). All borrowings of the Revolving Loan must be
made before June 2, 2003, at which time all unpaid principal and interest of the
Revolving Loan shall be due and payable. The Revolving Loan shall be evidenced
by Bank’s standard form of commercial promissory note (the “Revolving Note”).
Bank shall enter each amount borrowed and repaid in Bank’s records and such
entries shall be deemed correct. Omission of Bank to make any such entries shall
not discharge Borrower of its obligation to repay in full with interest all
amounts borrowed.

 

As of the date of this Agreement, the principal amount outstanding under
Borrower’s revolving loan with Bank evidenced by the promissory note dated July
2, 2001 (“Old Note”) shall be deemed the initial principal amount outstanding
under the Revolving Loan, and the Old Note is hereby cancelled and superceded by
the Revolving Note.

 

1.2 Terminology. The following words and phrases, whether used in their singular
or plural form, shall have the meanings set forth below:

 

“GAAP” means generally accepted accounting principles and practices consistently
applied. Accounting terms used in this Agreement but not otherwise expressly
defined have the meanings given them by GAAP.

 

“Lien” means any voluntary or involuntary security interest, mortgage, pledge,
claim, charge, encumbrance, title retention agreement, or third party interest,
covering all or any part of the property of Borrower or any Guarantor.

 

“Loan” means all the credit facilities described above.

 

“Loan Documents” means this Agreement, the Note, and all other documents,
instruments and agreements required by Bank and executed in connection with this
Agreement, the Note, the Loans, and with all other credit facilities from time
to time made available to Borrower by Bank.

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“Note” means all the promissory notes described above.

 

1.3 Prepayment. The Loan may be prepaid in full or in part but only in
accordance with the terms of the Note, and any such prepayment shall be subject
to any prepayment fee provided for therein. In the event of a principal
prepayment on any term indebtedness, the amount prepaid shall be applied to the
scheduled principal installments due in the reverse order of their maturity on
the Loan being prepaid.

 

1.4 Interest. The unpaid principal balance of the Loan shall bear interest at
the rate or rates provided in the Note.

 

1.5 Upfront Commitment Fee. On or before the date of execution of this
Agreement, Borrower shall pay to Bank a nonrefundable prorata commitment fee of
Five Thousand Dollars ($5,000.00). The prorata calculation shall be based on the
number of days from the first day the Loan is available to the Borrower through
the Loan’s maturity of June 2, 2003.

 

1.6 Balances. Borrower shall maintain its major depository accounts with Bank
until all obligations of Borrower to Bank under the Loan Documents have been
paid in full.

 

1.7 Disbursement. Bank shall disburse the proceeds of the Loan as provided in
Bank’s standard form Authorization(s) to Disburse executed by Borrower.

 

1.8 Security. Prior to any Loan disbursement, Borrower shall execute one or more
security agreements on Bank’s standard form, and one or more financing
statements suitable for filing in the official records of the appropriate state
government and/or any other location required by Bank, granting to Bank a first
priority security interest in such of Borrower’s property as is described in
said security agreement(s). Any exceptions to Bank’s first priority Lien are
permitted only as provided in this Agreement. At Bank’s request, Borrower will
obtain executed landlord’s and mortgagee’s waivers, each on Bank’s form,
covering all of Borrower’s property located on leased or encumbered real
property.

 

SECTION 2. CONDITIONS PRECEDENT

 

Bank shall not be obligated to disburse all or any portion of the Loans unless
at or prior to the time of each such disbursement, the following conditions have
been fulfilled to Bank’s satisfaction:

 

2.1 Compliance. Borrower shall have performed and complied with all terms and
conditions required by this Agreement to be performed or complied with, and
shall have executed and delivered to Bank the Note and all other Loan Documents.

 

2.2 Authorization to Obtain Credit. Borrower shall have provided Bank with an
executed copy of Bank’s form Authorization to Obtain Credit, authorizing the
execution, delivery and

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performance of this Agreement and the other Loan Documents. Such resolutions
shall also designate the persons who are authorized to act on Borrower’s behalf
in connection with this Agreement to do the things required of Borrower pursuant
to this Agreement.

 

2.3 Termination Statements. Borrower shall have provided Bank with termination
statements executed by such secured creditors as may be required by Bank,
suitable for filing with the Secretary of State in each state designated by
Bank.

 

2.4 Continuing Compliance. At the time any disbursement is to be made and
immediately thereafter, there shall not exist any Event of Default (as
hereinafter defined) or any event, condition, or act which with notice or lapse
of time, or both, would constitute an Event of Default.

 

SECTION 3. REPRESENTATIONS AND WARRANTIES

 

Borrower represents and warrants that:

 

3.1 Business Activity. Borrower’s principal business is computer programming
services.

 

3.2 Affiliates and Subsidiaries. Borrower’s affiliates and subsidiaries (those
entities in which Borrower has either a controlling interest or a twenty-five
percent (25%) or more ownership interest) and their addresses, and the names of
the persons or entities owning five percent (5%) or more of the equity interests
in Borrower, are as provided on a schedule delivered to Bank on or before the
date of this Agreement.

 

3.3 Organization and Qualification. Borrower is duly organized and existing
under the laws of the state of its organization, is duly qualified and in good
standing in any jurisdiction where such qualification is required, and has the
power and authority to carry on the business in which it is engaged and/or
proposes to engage.

 

3.4 Power and Authorization. Borrower has the power and authority to enter into
this Agreement and to execute and deliver the Note and all other Loan Documents.
This Agreement and all things required by this Agreement and the other Loan
Documents have been duly authorized by all requisite action of Borrower.

 

3.5 Authority to Borrow. The execution, delivery and performance of this
Agreement, the Note and all other Loan Documents are not in contravention of any
of the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which it or any of its property is bound or affected.

 

3.6 Compliance with Laws. Borrower is in compliance with all applicable laws,
rules, ordinances or regulations, which materially affect the operations or
financial condition of Borrower.

 

3.7 Title. Except for assets which may have been disposed of in the ordinary
course of business, Borrower has good and marketable title to all property
reflected in its financial

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statements delivered to Bank and to all property acquired by Borrower since the
date of said financial statements, free and clear of all Liens, except Liens
specifically referred to in said financial statements.

 

3.8 Financial Statements. Borrower’s financial statements, including both a
balance sheet at March 31, 2002, together with supporting schedules, and an
income statement for the three (3) months ended March 31, 2002, have heretofore
been furnished to Bank, are true and complete, and fairly represent Borrower’s
financial condition for the period covered thereby. Since March 31, 2002, there
has been no material adverse change in Borrower’s financial condition or
operations.

 

3.9 Litigation. There is no litigation or proceeding pending or threatened
against Borrower or any of its property which is reasonably likely to affect the
financial condition, property or business of Borrower in a materially adverse
manner or result in liability in excess of Borrower’s insurance coverage.

 

3.10 ERISA. Borrower’s defined benefit pension plans (as defined in the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”)), meet, as of the
date hereof, the minimum funding standards of Section 302 of ERISA, and no
Reportable Event or Prohibited Transaction as defined in ERISA has occurred with
respect to any such plan.

 

3.11 Regulation U. No action has been taken or is currently planned by Borrower,
or any agent acting on its behalf, which would cause this Agreement or the Note
to violate Regulation U or any other regulation of the Board of Governors of the
Federal Reserve System, or to violate the Securities and Exchange Act of 1934,
in each case as in effect now or as the same may hereafter be in effect.
Borrower is not engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock as one of its important activities and,
except as may be expressly agreed to and documented between Borrower and Bank,
none of the proceeds of the Loan will be used directly or indirectly for such
purpose.

 

3.12 No Event of Default. Borrower is not now in default in the payment of any
of its material obligations, and there exists no Event of Default, and no
condition, event or act which with notice or lapse of time, or both, would
constitute an Event of Default.

 

3.13 Continuing Representations and Warranties. The foregoing representations
and warranties shall be considered to have been made again at and as of the date
of each and every Loan disbursement and shall be true and correct as of each
such date.

 

SECTION 4. AFFIRMATIVE COVENANTS

 

Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:

 

4.1 Use of Proceeds. Borrower will use the proceeds of the Loan only as provided
in Section 1 above.

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4.2 Payment of Obligations. Borrower will pay and discharge promptly all taxes,
assessments and other governmental charges and claims levied or imposed upon it
or its property, or any part thereof; provided, however, that Borrower shall
have the right in good faith to contest any such taxes, assessments, charges or
claims and, pending the outcome of such contest, to delay or refuse payment
thereof provided that adequately funded reserves are established by it to pay
and discharge any such taxes, assessments, charges and claims.

 

4.3 Maintenance of Existence. Borrower will maintain and preserve its existence,
its assets, and all rights, franchises, licenses and other authority necessary
for the conduct of its business, and will maintain and preserve its property,
equipment and facilities in good order, condition and repair. Bank may, at
reasonable times, visit and inspect any of Borrower’s properties.

 

4.4 Records. Borrower will keep and maintain full and accurate accounts and
records of its operations in accordance with GAAP and will permit Bank, at
Borrower’s expense, to have access thereto, to make examination and photocopies
thereof, and to make audits of Borrower’s accounts and records and Bank’s
collateral during regular business hours.

 

4.5 Information Furnished. Borrower will furnish to Bank:

 

(a) Within Sixty (60) days after the close of each fiscal quarter, except for
the final quarter of each fiscal year, its unaudited balance sheet as of the
close of such fiscal quarter, its unaudited income and expense statement with
year-to-date totals and supportive schedules, and its statement of retained
earnings for that fiscal quarter, all prepared in accordance with GAAP;

 

(b) Within One-Hundred Twenty (120) days after the close of each fiscal year, a
copy of its statement of financial condition including at least its balance
sheet as of the close of such fiscal year and its income and expense statement,
and its retained earnings statement for such fiscal year, examined and prepared
on an audited basis by independent certified public accountants selected by
Borrower and reasonably satisfactory to Bank, in accordance with GAAP along with
any management letter provided by such accountants;

 

(c) Within Sixty (60) days after the close of each of the first three fiscal
quarters and One Hundred Twenty (120) days for the fourth fiscal quarter, a
certification of compliance with all covenants under this Agreement, executed by
Borrower’s duly authorized officer, in form acceptable to Bank;

 

(d) Prompt written notice to Bank of any Event of Default or breach under any of
the terms or provisions of this Agreement or any other Loan Document, any
litigation which would have a material adverse effect on Borrower’s financial
condition, and any other matter which has resulted in, or is likely to result
in, a material adverse change in Borrower’s financial condition or operations;

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(e) Prior written notice to Bank of any change in Borrower’s officers and other
senior management, Borrower’s name or state of organization, and the location of
Borrower’s assets, principal place of business or chief executive office;

 

(f) Within fifteen (15) days after Borrower knows or has reason to know that any
Reportable Event or Prohibited Transaction (as defined in ERISA) has occurred
with respect to any defined benefit pension plan of Borrower, a statement of an
authorized officer of Borrower describing such event or condition and the
action, if any, which Borrower proposes to take with respect thereto; [and]

 

(g) Such other financial statements and information as Bank may reasonably
request from time to time;

 

4.6 Quick Ratio. Borrower will at all times maintain a ratio of cash, accounts
receivable and marketable securities to current liabilities of not less than
2.0:1.0.

 

4.7 Tangible Net Worth. Borrower will at all times maintain Tangible Net Worth
of not less than Thirty-Eight Million Two Hundred Thirty One Million Dollars
($38,231,000.00) at all times, representing 90% of Tangible Net Worth as of
March 31, 2002. “Tangible Net Worth” means Borrower’s net worth increased by
indebtedness subordinated to Bank and decreased by patents, licenses,
trademarks, trade names, goodwill and other similar intangible assets,
organizational expenses, security deposits, prepaid costs and expenses and
monies due from affiliates (including officers, shareholders and directors).

 

4.8 Debt to Tangible Net Worth. Borrower will at all times maintain a ratio of
total liabilities to Tangible Net Worth of not greater than 1.0:1.0. “Tangible
Net Worth” means Borrower’s net worth increased by indebtedness subordinated to
Bank and decreased by patents, licenses, trademarks, trade names, goodwill and
other similar intangible assets, organizational expenses, security deposits,
prepaid costs and expenses and monies due from affiliates (including officers,
shareholders and directors).

 

4.9 Profitability. Borrower shall generate on a quarterly basis, “adjusted net
profit after taxes” equal to or greater than $1.00. “Adjusted net profit after
taxes” shall be defined as net income after taxes for the fiscal quarter plus
the sum of amortization from deferred stock compensation, purchased in-process
research and development acquired during the fiscal quarter, and goodwill.

 

4.10 Insurance. Borrower will keep all of its insurable property, whether real,
personal or mixed, insured by companies approved by Bank, against fire and such
other risks, and in such amounts as is customarily obtained by companies
conducting similar business with respect to like properties. Borrower will
furnish to Bank statements of its insurance coverage, will promptly upon Bank’s
request furnish other or additional insurance deemed necessary by Bank to the
extent that such insurance may be available, and hereby assigns to Bank, as
security for Borrower’s obligations to Bank, the proceeds of any such insurance.
Prior to any Loan disbursement, Bank will be named loss payee under all policies
insuring the collateral. Borrower will maintain adequate worker’s compensation
insurance and adequate insurance against liability for damage to persons or
property. All policies shall require at least ten (10) days’ written notice to
Bank before alteration or cancellation.

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4.11 Additional Requirements. Upon Bank’s demand, Borrower will promptly take
such further action and execute all such additional documents and instruments in
connection with this Agreement and the other Loan Documents as Bank in its
reasonable discretion deems necessary, and promptly supply Bank with such other
information concerning its affairs as Bank may request from time to time.

 

4.12 Litigation and Attorneys’ Fees. Upon Bank’s demand, Borrower will promptly
pay to Bank reasonable attorneys’ fees, including the reasonable estimate of the
allocated costs and expenses of in-house legal counsel and staff, and all costs
and other expenses paid or incurred by Bank in collecting, modifying or
compromising the Loan or in enforcing or exercising its rights or remedies
created by, connected with or provided for in this Agreement and the other Loan
Documents. If any judicial action, arbitration or other proceeding is commenced,
only the prevailing party shall be entitled to attorneys’ fees and court costs.

 

4.13 Bank Expenses. Upon Bank’s request, Borrower will pay or reimburse Bank for
all costs, expenses and fees incurred by Bank in preparing and documenting this
Agreement and the Loan, and all amendments and modifications to any Loan
Documents, including but not limited to all filing and recording fees, costs of
appraisals, insurance and attorneys’ fees, including the reasonable estimate of
the allocated costs and expenses of in-house legal counsel and staff.

 

SECTION 5. NEGATIVE COVENANTS

 

Until all sums payable pursuant to this Agreement, the Note and the other Loan
Documents have been paid in full, unless Bank otherwise consents in writing,
Borrower agrees that:

 

5.1 Liens. Borrower shall not enter into or suffer to exist any arrangement or
agreement, which directly or indirectly prohibits Borrower from creating any
Lien in favor of Bank. Borrower will not grant to any other person, a Lien on
any of its assets, except (a) Liens in favor of Bank, (b) Liens for taxes not
delinquent and taxes and other items being contested in good faith, (c) minor
encumbrances and easements on real property which do not affect its market
value, (d) existing Liens on Borrower’s personal property, (e) future purchase
money security interests encumbering only the personal property purchased.

 

5.2 Borrowings. Borrower will not sell, discount or otherwise transfer any
account receivable or any note, draft or other evidence of indebtedness, except
to Bank or except to a financial institution at face value for deposit or
collection purposes only, and without any fees other than the financial
institution’s normal fees for such services. Borrower will not borrow any money,
become contingently liable to borrow money, or enter any agreement to directly
or indirectly obtain borrowed money, except pursuant to agreements with Bank.

 

5.3 Sale of Assets, Liquidation or Merger. Borrower will not liquidate, dissolve
or enter into any consolidation, merger, partnership or other combination, or
convey, sell or lease all or the

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greater part of its assets or business, or purchase or lease all or the greater
part of the assets or business of another, unless Borrower is in full compliance
of all terms and conditions contained within this Agreement, prior to and after
the sale, liquidation or merger.

 

5.4 Loans, Advances and Guaranties. Borrower will not, except in the ordinary
course of business as currently conducted, make any loans or advances, become a
guarantor or surety, or pledge its credit or properties.

 

5.5 Investments. Borrower will not purchase the debt or equity of another except
for savings accounts and certificates of deposit of Bank, direct U.S. Government
obligations, and commercial paper issued by corporations with the top ratings of
Moody’s or Standard & Poor’s, provided that all such permitted investments shall
mature within one year of purchase.

 

5.6 Payment of Dividends. Borrower will not declare or pay any dividends, other
than dividends payable solely in its own common stock, or authorize or make any
other distribution with respect to any of its stock now or hereafter
outstanding.

 

5.7 Redemption of Stock. Borrower may repurchase its shares of common stock, up
to an aggregate maximum of One Million (1,000,000) shares, provided Borrower is
not in breach of any covenants at the time of the repurchase or after the
repurchase. As of this date of the document, Borrower has purchased an aggregate
230,000 shares.

 

5.8 Affiliate Transactions. Borrower will not transfer any property to any
affiliate, except for value received in the normal course of business and for an
amount, including any management or service fee(s), as would be conducted and
charged with an unrelated or unaffiliated entity. Borrower will not pay any
management fee or fee for services to any affiliate without Bank’s prior written
consent.

 

SECTION 6. EVENTS OF DEFAULT

 

The occurrence of any of the following events (“Events of Default”) shall
terminate any obligation of Bank to make or continue the Loan and shall
automatically, unless otherwise provided under the Note, make all sums of
interest and principal and any other amounts owing under the Loan immediately
due and payable, without notice of default, presentment or demand for payment,
protest or notice of nonpayment or dishonor, or any other notices or demands:

 

6.1 Borrower shall default in the due and punctual payment of the principal of
or the interest on the Note or on any amounts owing under any of the Loan
Documents;

 

6.2 Any default shall occur under the Note;

 

6.3 Borrower shall default in the due performance or observance of any covenant
or condition of the Loan Documents;

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6.4 Any guaranty or subordination agreement required hereunder shall be breached
or becomes ineffective, or any Guarantor or subordinating creditor shall die,
disavow or attempt to revoke or terminate such guaranty or subordination
agreement; or

 

6.5 There shall be a change in ownership or control of ten percent (10%) or more
of the equity interests in Borrower or any Guarantor.

 

SECTION 7. GENERAL PROVISIONS

 

7.1 Additional Remedies. The rights, powers and remedies given to Bank hereunder
shall be cumulative and not alternative and shall be in addition to all rights,
powers and remedies given to Bank by law against Borrower or any other person or
entity including but not limited to Bank’s rights of setoff and banker’s lien.

 

7.2 Nonwaiver. Any forbearance or failure or delay by Bank in exercising any
right, power or remedy hereunder shall not be deemed a waiver thereof and any
single or partial exercise of any right, power or remedy shall not preclude the
further exercise thereof. No waiver shall be effective unless it is in writing
and signed by an officer of Bank.

 

7.3 Inurement. The benefits of this Agreement and the other Loan Documents shall
inure to the successors and assigns of Bank and the permitted successors and
assigns of Borrower, but any attempted assignment by Borrower without Bank’s
prior written consent shall be null and void.

 

7.4 Applicable Law. This Agreement and the other Loan Documents shall be
governed by and construed according to the laws of the State of California.

 

7.5 Severability. Should any one or more provisions of this Agreement or any
other Loan Document be determined to be illegal or unenforceable, all other
provisions of such document shall nevertheless be effective.

 

7.6 Controlling Document. In the event of any inconsistency between the terms of
this Agreement and any other Loan Document, the terms of the other Loan Document
shall prevail.

 

7.7 Construction. The section and subsection headings herein are for convenient
reference only and shall not limit or otherwise affect the interpretation of
this Agreement.

 

7.8 Amendments. This Agreement may be amended only in writing signed by all
parties hereto.

 

7.9 Counterparts. Borrower and Bank may execute one or more counterparts to this
Agreement, each of which shall be deemed an original, but all such counterparts
when taken together, shall constitute one and the same agreement.

 

7.10 Notices. Any notices or other communications provided for or allowed
hereunder shall be effective only when given by one of the following methods and
addressed to the parties at

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their respective addresses and shall be considered to have been validly given
(a) upon delivery, if delivered personally, (b) upon receipt, if mailed, first
class postage prepaid, with the United States Postal Service, (c) on the next
business day, if sent by overnight courier service of recognized standing, or
(d) upon telephoned confirmation of receipt, if telecopied. The addresses to
which notices or demands are to be given may be changed from time to time by
notice delivered as provided above.

 

7.11 Integration Clause. Except for the other Loan Documents, this Agreement
constitutes the entire agreement between Bank and Borrower regarding the Loan,
and all prior oral or written communications between Borrower and Bank shall be
of no further effect or evidentiary value.

 

THIS AGREEMENT is executed on behalf of the parties by their duly authorized
representative(s) as of the date first above written.

 

Embarcadero Technologies, Inc.

 

UNION BANK OF CALIFORNIA, N.A.

By:

 

/s/    STEPHEN R. WONG

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By:

 

/s/    JAMES B. GOUDY

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Title:

 

CEO

 

Title:

 

James B. Goudy, Vice President

 

Address:

 

425 Market Street, Suite 425

San Francisco, CA 94104

Telephone: (415) 834-3131

Fax: (415) 393-0161

 

Address:

 

99 Almaden Boulevard, Suite 200

San Jose, CA 95113

Telephone: (408) 279-7714

Fax: (408) 280-7163

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March 12, 2003

 

Embarcadero Technologies, Inc.

425 Market Street Suite 425

San Francisco, CA 94104

Attn: Stephen R. Wong, Chairman/CEO

 

  Re: First Amendment (“Amendment”) to the Amended and Restated Loan Agreement
dated July 1, 2002 (all prior Amendments, this Amendment, and the Amended and
Restated Loan Agreement together called the “Agreement”)

 

Dear Mr. Wong:

 

In reference to the Agreement between Union Bank of Calfornia, N.A. (“Bank”) and
Embarcadero Technologies, Inc. (“Borrower”), the Bank and Borrower desire to
amend the Agreement. Capitalized terms used herein which are not otherwise
defined shall have the meaning given them in the Agreement.

 

Amendment to the Agreement

 

(a) Section 5.7 of the Agreement is hereby amended in its entirety as follows:

 

“Borrower may repurchase its shares of common stock, up to an aggregate maximum
of One Million Five Hundred Thousand (1,500,000) shares, provided Borrower is
not in breach of any covenants at the time of the repurchase or after the
repurchase. As of the date of this document, Borrower has purchased an aggregate
of 980,822 shares.”

 

Except as specifically amended hereby, the Agreement shall remain in full force
and effect and is hereby ratified and confirmed. This Amendment shall not be a
waiver of any existing or future default or breach of a condition or covenant
unless specified herein.

 

This Amendment shall become effective when the Bank shall have received the
acknowledgment copy of this Amendment executed by the Borrower.

 

Page 1 of 2

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Very truly yours,

   

UNION BANK OF CALIFORNIA, N.A.

By:

 

/s/    JAMES B. GOUDY

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James B. Goudy

   

Title: Vice President

 

Agreed and Accepted to this 26 day of March, 2003.

 

Embarcadero Technologies, Inc.

 

By:  

/s/    STEPHEN R. WONG

   

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Stephen R. Wong

Title: Chairman/CEO

 

Page 2 of 2

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June 2, 2003

 

Embarcadero Technologies, Inc.

425 Market Street Suite 425

San Francisco, CA 94104

Attention: Stephen R. Wong, Chairman/CEO

 

Re: Second Amendment (“Amendment”) to the Amended and Restated Loan Agreement
dated July 1, 2002 (all prior Amendments, this Amendment, and the Amended and
Restated Loan Agreement together called the “Agreement”)

 

Dear Mr. Wong:

 

In reference to the Agreement between Union Bank of California, N.A. (“Bank”)
and Embarcadero Technologies, Inc. (“Borrower”), the Bank and Borrower desire to
amend the Agreement. Capitalized terms used herein which are not otherwise
defined shall have the meaning given them in the Agreement.

 

Amendments to the Agreement:

 

(a) Section 1.1.1, line 5 of the Agreement is hereby amended by substituting the
date “June 30, 2004” for the date “June 2, 2003.”

 

(b) Section 5.7 of the Agreement is hereby amended in its entirety as follows:

 

“Borrower may repurchase its shares of common stock, up to an aggregate maximum
of Two Million (2,000,000) shares, provided Borrower is not in breach of any
covenants at the time of the repurchase or after the repurchase. As of March 31,
2003, Borrower has purchased an aggregate 1,162,000 shares.”

 

(c) Section 3.8 of the Agreement is hereby amended in its entirety as follows:

 

“Borrowers financial statements, including both a balance sheet at March 31,
2003, together with supporting schedules, and the income statement for the three
(3) months ended March 31, 2003, have heretofore been furnished to the Bank, are
true and complete, and fairly represent Borrower’s financial condition for the
period covered thereby. Since March 31, 2003, there has been no material adverse
change in Borrower’s financial condition or operations.”

 

Except as specifically amended hereby, the Agreement shall remain in full force
and effect and is hereby ratified and confirmed. This Amendment shall not be a
waiver of any existing or future default or breach of a condition or covenant
unless specified herein.

 

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This Amendment shall become effective when the Bank shall have received the
acknowledgment copy of this Amendment executed by the Borrower.

 

Very truly yours,

 

UNION BANK OF CALIFORNIA, N.A.

 

By:

 

/s/    JAMES B. GOUDY

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James B. Goudy

Title:

 

Vice President

 

Agreed and Accepted to this 19th day of June, 2003.

 

EMBARCADERO TECHNOLOGIES, INC.

By:

 

/s/    STEPHEN R. WONG

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Stephen R. Wong

Title:

 

Chairman/CEO

 

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