-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T6IF8hhe4d2jv8DvFGjjuv8/yD9eTt8apoNsw1Nf4OGPEM7z6foMZaWBsIquAtbd BVAAUjCAj7zZ+tYt4c4agA== 0001019687-02-002324.txt : 20021127 0001019687-02-002324.hdr.sgml : 20021127 20021127144529 ACCESSION NUMBER: 0001019687-02-002324 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20021127 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERSISTENCE SOFTWARE INC CENTRAL INDEX KEY: 0001084400 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943138935 STATE OF INCORPORATION: CA FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-25857 FILM NUMBER: 02843324 BUSINESS ADDRESS: STREET 1: 1720 SOUTH AMPHLETT BLVD., 3RD FLOOR CITY: SAN MATEO STATE: CA ZIP: 94402 BUSINESS PHONE: 6503417733 8-K 1 persistence_8k-112702.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 NOVEMBER 27, 2002 Date of Report (Date of earliest event reported) PERSISTENCE SOFTWARE, INC. (Exact name of registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation) 000-25857 94-3138935 (Commission File Number) (I.R.S. Employer Identification No.) 1720 SOUTH AMPHLETT BLVD., THIRD FLOOR SAN MATEO, CALIFORNIA 94402 (Address of principal executive offices, with zip code) (650) 372-3600 (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS AND REQUIRED FD DISCLOSURE. On November 26, 2002, Persistence Software, Inc. (the "Company") entered into a Common Stock Purchase Agreement (the "Purchase Agreement") with Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. (the "Purchasers"), whereby the Purchasers purchased 3,758,692 shares of the Company's Common Stock (the "Shares") at a purchase price of $0.5321 per share, for an aggregate sale price of $2,000,000.02, and warrants to purchase up to 1,205,130 shares the Company's Common Stock (the "Warrant Shares") at an exercise price of $0.75 per share (the "Financing"). Pursuant to the Registration Rights Agreement entered into as part of the Financing, the Company has agreed to prepare and file with the Securities and Exchange Commission a registration statement covering the resale of the Shares and the Warrant Shares on the earlier of (i) 30 days after the Company files its Annual Report on Form 10-K for the year ended December 31, 2002 or (ii) April 30, 2003. The Registration Rights Agreement is attached hereto as Exhibit 10.20 and incorporated herein by reference. The Company has also agreed to file an additional registration statement on the request of the Purchasers under certain circumstances. In connection with the Financing the Company also appointed Thomas P. Shanahan to its Board of Directors as a Class III director. The Company, the Purchasers and Christopher T. Keene, the Company's Chairman of the Board and Chief Executive Officer, additionally entered into a Voting Agreement attached hereto as Exhibit 10.21 and incorporated herein by reference, in which Mr. Keene agrees to vote for the election of the Purchasers' designee to the Company's Board of Directors for so long as the Purchasers beneficially own at least 11% of the outstanding capital stock of the Company. The terms of the Financing are more fully set forth in the Purchase Agreement attached hereto as Exhibit 10.19 and incorporated herein by reference. In addition, a pro forma balance sheet as of September 30, 2002 that reflects the effects of the Financing is attached hereto as Exhibit 99.2 and incorporated herein by reference. On November 27, 2002, the Company issued a press release related to the Financing. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Not applicable. (b) Not applicable. (c) Exhibits: 10.19 Common Stock Purchase Agreement dated as of November 26, 2002 by and between Persistence Software, Inc. and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. -2- 10.20 Registration Rights Agreement dated as of November 26, 2002 by and between Persistence Software, Inc. and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 10.21 Voting Agreement dated as of November 26, 2002 by and between Persistence Software, Inc., Christopher T. Keene and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 10.22 Form of Common Stock Warrant dated as of November 26, 2002 issued to Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 99.1 Press Release of Persistence Software, Inc. dated November 27, 2002. 99.2 Pro forma Balance Sheet as of September 30, 2002. -3- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. PERSISTENCE SOFTWARE, INC. Date: November 27, 2002 By: /S/ CHRISTOPHER T. KEENE ------------------------ Christopher T. Keene Chief Executive Officer -4- PERSISTENCE SOFTWARE, INC. INDEX TO EXHIBITS Exhibit Number Description -------------- ----------- 10.19 Common Stock Purchase Agreement dated as of November 26, 2002 by and between Persistence Software, Inc. and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 10.20 Registration Rights Agreement dated as of November 26, 2002 by and between Persistence Software, Inc. and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 10.21 Voting Agreement dated as of November 26, 2002 by and between Persistence Software, Inc., Christopher T. Keene and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 10.22 Form of Common Stock Warrant dated as of November 26, 2002 issued to Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. 99.1 Press Release of Persistence Software, Inc. dated November 27, 2002. 99.2 Pro forma Balance Sheet as of September 30, 2002. EX-10.19 3 persistence_8kex10-19.txt EXHIBIT 10.19 PERSISTENCE SOFTWARE, INC. COMMON STOCK PURCHASE AGREEMENT NOVEMBER 26, 2002 PERSISTENCE SOFTWARE, INC. COMMON STOCK PURCHASE AGREEMENT This Common Stock Purchase Agreement (the "AGREEMENT") is entered into as of this 26th day of November, 2002 (the "EFFECTIVE DATE") by and between Persistence Software, Inc., a Delaware corporation (the "COMPANY"), and the entities listed on SCHEDULE A hereto (each a "PURCHASER" and collectively the "PURCHASERS"). SECTION 1 SALE OF COMMON STOCK AND WARRANT -------------------------------- 1.1 SALE OF COMMON STOCK. Subject to the terms and conditions hereof, on the Closing Date (as defined below), the Company will issue and sell to each Purchaser, and each Purchaser will purchase from the Company, that portion of the Purchased Shares (as defined below) set forth opposite each such Purchaser's name on SCHEDULE A attached hereto at the Stock Purchase Price (as defined below). The term "PURCHASED SHARES" shall mean Three Million Seven Hundred Fifty Eight Thousand Six Hundred Ninety Two (3,758,692) shares of Common Stock, par value $0.001 per share, of the Company. The aggregate Stock Purchase Price is Two Million Dollars ($2,000,000) or $0.5321 per share. 1.2 ISSUANCE OF WARRANT. Subject to the terms and conditions hereof, on the Closing Date, the Company will issue a warrant to purchase that portion of the Warrant Shares (as defined below) of the Company (the "WARRANT"), in substantially the form attached as EXHIBIT A hereto, to each Purchaser as set forth opposite each such Purchaser's name on SCHEDULE A attached hereto at the Stock Purchase Price (as defined below). The exercise price per Warrant Share shall be $0.75 (subject to adjustment for stock splits, stock dividends and the like and as otherwise provided in the Registration Statement of even date herewith). The aggregate purchase price of the Warrants shall be $100 (the "WARRANT PURCHASE PRICE" and together with the Stock Purchase Price, the "PURCHASE PRICE"). The Purchased Shares and the Warrant Shares are sometimes referred to herein as the "SECURITIES". (a) The aggregate number of Warrant Shares is One Million Two Hundred Five Thousand One Hundred Thirty (1,205,130) shares of Common Stock of the Company (subject to adjustment for stock splits, stock dividends and the like). (b) For avoidance of doubt, the formula for calculating the number of Warrant Shares was intended to ensure that the sum of (1) the total number of shares of Common Stock to be issued to the Purchasers at the Closing (including the number of shares of Common Stock issuable upon exercise of the Warrants) and (2) the aggregate number of shares of Common Stock of the Company which all of the Purchasers may be deemed to beneficially own (as determined in accordance with the rules of the Securities and Exchange Commission) immediately prior to the Closing Date is equal to 19.9% of the sum of (x) the number of shares of Common Stock of the Company issued and outstanding as of October 31, 2002 and (y) the total number of shares of Common Stock to be issued to the Purchasers at the Closing (including the number of shares of Common Stock issuable upon exercise of the Warrants). 1.3 CLOSING DATE. The closing (the "CLOSING") of the purchase and sale of the Purchased Shares and the Warrant shall be held at the offices of Venture Law Group, 2775 Sand Hill Road, Menlo Park, California at 1:45 p.m. on November 26, 2002, or at such other time and place upon which the Company and the Purchasers shall mutually agree (the date of the Closing is hereinafter referred to as the "CLOSING DATE"). 1.4 DELIVERY. At the Closing, the Company will deliver to each Purchaser (i) a binding and irrevocable instruction letter to the Company's transfer agent (U.S. Stock Transfer Corporation) instructing the transfer agent to issue a stock certificate to such Purchaser representing the Purchased Shares and (ii) the Warrant, against payment of the Purchase Price, by wire transfer of immediately available funds. 1.5 LEGEND. The certificate or certificates for the Securities (and any securities issued in respect of or exchange for the Securities) shall be subject to a legend or legends restricting transfer under the Securities Act of 1933, as amended (the "SECURITIES ACT") and referring to restrictions on transfer herein, such legends to be substantially as follows: THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY AN AFFILIATE OF THE COMPANY. NO SALE OR DISPOSITION OF THESE SHARES MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION RELATED THERETO OR IN COMPLIANCE WITH RULE 144 OR ITS SUCCESSOR OR PURSUANT TO AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. The legends set forth above shall be removed and the Company shall issue a certificate without such legends to the holder of any of the Securities upon which it is stamped, if (a) the sale of such Security is registered under the Securities Act, or (b) in connection with the resale of such Security, such holder provides the Company with an opinion of counsel reasonably acceptable to the Company, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the Securities Act, or (c) the Security can be sold to the public pursuant to Rule 144 under the Securities Act ("RULE 144") and a registered broker-dealer provides to the Company a customary broker's Rule 144 letter, or (d) such holder provides the Company with reasonable assurances that such Security can be sold under Rule 144(k) of. Each Purchaser agrees to sell all Securities, including those represented by a certificate(s) from which the legends have been removed, pursuant to an effective registration statement or under an exemption from the registration requirements of the Securities Act. -2- SECTION 2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- The Company hereby represents and warrants to each Purchaser that as of the Effective Date: 2.1 ORGANIZATION. The Company is a corporation duly organized and validly existing under the laws of the State of Delaware and is in good standing under such laws. The Company has the requisite corporate power and authority to own, lease and operate its properties and assets, and to carry on its business as presently conducted and as proposed to be conducted. The Company is qualified to do business as a foreign corporation in each jurisdiction in which the ownership of its property or the nature of its business requires such qualification, except where failure to so qualify would not have a materially adverse effect on the Company. The Company has no subsidiaries or equity interest in any other entity other than Persistence Software Limited, a United Kingdom Corporation, Persistence Software GmbH, a German corporation, and Persistence Software Asia/Pacific Limited, a HongKong corporation, each of which is duly organized and validly existing under the laws of the jurisdiction of its incorporation, except where such failure does not have a materially adverse effect on the Company. 2.2 CAPITALIZATION. The authorized capital stock of the Company consists of 75,000,000 shares of Common Stock, $0.001 par value, of which at October 31, 2002, 20,231,266 shares were issued and outstanding, and 5,000,000 shares of Preferred Stock, $0.001 par value, of which no shares of Preferred Stock were issued and outstanding. All such issued and outstanding shares have been duly authorized and validly issued and are fully paid and nonassessable. In addition, as of October 31, 2002, (i) 80,000 shares of Common Stock were issuable upon exercise of outstanding warrants, (ii) under the Company's 1997 Stock Plan, options to purchase 3,714,323 shares of Common Stock were outstanding and 2,115,926 shares were available for future issuance (plus up to an additional 38,645 shares of Common Stock that may be transferred to the 1997 Stock Plan from the Company's 1994 Stock Purchase Plan), and (iii) under the Company's 1999 Directors' Stock Option Plan, options to purchase 148,000 shares of Common Stock were outstanding and 352,000 shares were available for future issuance. Except as set forth in the preceding sentence and for a commitment to issue a warrant to purchase 50,000 shares of Common Stock of the Company (a copy of which has been provided to the Purchasers), there are no other options, warrants, conversion privileges or other contractual rights presently outstanding to purchase or otherwise acquire any shares of the Company's capital stock or other securities other than pursuant to the Company's 1994 Stock Purchase Plan and 1999 Employee Stock Purchase Plan. There are no preemptive rights or rights of first refusal or similar rights with respect to the issuance and sale of the Securities. 2.3 AUTHORIZATION. The Company has all corporate right, power and authority to enter into this Agreement, the Warrant, the Voting Agreement substantially in the form attached hereto as EXHIBIT B (the "VOTING AGREEMENT") and the Registration Rights Agreement substantially in the form attached hereto -3- as EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT," and collectively with this Agreement and the Warrant (the "TRANSACTION Documents") and to consummate the transactions contemplated hereby and thereby. All corporate action on the part of the Company, its directors and stockholders necessary for the authorization, execution, delivery and performance of the Transaction Documents by the Company, and the authorization, sale, issuance and delivery of the Purchased Shares and the Warrant has been taken. The Transaction Documents have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company enforceable in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy as they may apply to the indemnification and contribution obligations pursuant to Section 1.7 of the Registration Rights Agreement. 2.4 VALID ISSUANCE. The Purchased Shares, Warrant and Warrant Shares are duly authorized, and when issued, sold and delivered in accordance with the terms of the Transaction Documents, (i) will be duly and validly issued, fully paid and nonassessable and free and clear of any taxes, liens, claims, preemptive or similar rights or encumbrances imposed by or through the Company, (ii) based in part upon the representations of the Purchasers in this Agreement, will be issued, sold and delivered in compliance with all applicable federal and state securities laws, and (iii) the Purchased Shares (and upon payment of the aggregate Exercise Price (as defined in the Warrants), the Warrant Shares) will be entitled to all the rights, preferences and privileges of the shares of Common Stock as set forth in the Company's Certificate of Incorporation. The Warrant Shares have been duly reserved for issuance. 2.5 NO CONFLICT. The execution and delivery of the Transaction Documents do not, and the consummation of the transactions contemplated hereby and thereby will not, conflict with, or result in any violation of, breach or default (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit, under, any provision of the Certificate of Incorporation or Bylaws of the Company or any material agreement attached as an exhibit to the Company's SEC Documents (as defined below), or any judgment, order, decree, statute, law, ordinance, rule, listing requirement or regulation applicable to the Company, its properties or assets, which conflict, violation, default or right would have a material adverse effect on the business, properties, prospects, financial condition or operations of the Company. 2.6 SEC DOCUMENTS. The Company has filed with the Securities and Exchange Commission (the "SEC"): (i) the Company's Annual Report on Form 10-K for the year ended December 31, 2001, (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002, (iii) the Company's Proxy Statement for the 2002 Annual Meeting of Stockholders, (iv) all Current Reports on Form 8-K required to be filed by the Company with the Commission since December 31, 2001, and (v) all other documents, if any, filed by the Company with the SEC since November 14, 2002 pursuant to the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") copies of which have been made available to the Purchasers (the "SEC DOCUMENTS"), have been duly and timely filed, were in substantial compliance with the requirements of their respective forms when filed, were complete and correct in all material respects as of the dates at which the information was furnished, and contained (as of -4- such dates) no untrue statement of a material fact nor omitted to state a material fact necessary in order to make the statements made therein in light of the circumstances in which made not misleading; provided however that any information set forth in any SEC Document that is a forward-looking statement as defined in Rule 175(c) promulgated by the SEC under the Securities Act shall not be deemed to contain an untrue statement of material fact as long as such forward-looking statement was made at the time with a reasonable basis and in good faith. Any statements made in any such SEC Documents that are or were required to be updated or amended under applicable law have been so updated or amended. The Company is not aware of any event occurring on or prior to the Closing (other than the transactions effected hereby) that would require the filing of, or with respect to which the Company intends to file, a Form 8-K after the Closing. 2.7 GOVERNMENTAL CONSENTS, ETC. No consent, approval or authorization of or designation, declaration or filing with any governmental authority or self regulatory organization on the part of the Company is required in connection with the valid execution and delivery of the Transaction Documents, or the consummation of any other transaction contemplated hereby and thereby, except such filings as may be required to be made with the SEC, Nasdaq, the National Association of Securities Dealers, Inc. and with governmental authorities for purposes of effecting compliance with the securities and blue sky laws in the states in which the Securities are offered and/or sold (which compliance will be effected in accordance with such laws). 2.8 LITIGATION. Other than as set forth in the SEC Documents, there is no action, suit, proceeding, claim, arbitration or investigation pending or as to which the Company has received any notice of assertion against the Company, which could reasonably be expected to result in a material adverse effect on the business, properties, prospects, financial condition or operations of the Company. 2.9 NO MATERIAL CHANGE. Subsequent to the date of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2002, the Company has not incurred any material liabilities or obligations, direct or contingent, nor has the Company purchased any of its outstanding capital stock, nor paid or declared any dividends or entered into any transactions not in the ordinary course of business; and there has been no change in the capital stock or consolidated long term debt or short term obligations (other than in the ordinary course) of the Company or a material adverse change in the business, properties, prospects, financial condition or operations of the Company; provided, however that changes in the ordinary course of business consistent with past practices, including but not limited to the use of cash and increases in liabilities in the ordinary course of business consistent with past practices, shall not be deemed to be a material adverse change. 2.10 NO MATERIAL DEFAULT. The Company is not in violation of or default in any material respect under any provision of (a) its Certificate of Incorporation or Bylaws, (b) any federal or state judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company, or (c) any material agreement attached as an exhibit to the SEC Documents, except such violations or defaults as would not alone or in the aggregate have a material adverse effect on the business, properties, prospects, financial condition or operations of the Company. -5- 2.11 LISTING. The Company's Common Stock is currently traded on Nasdaq; however, the Company has received a letter dated September 9, 2002 from the Nasdaq staff regarding the possible delisting of the Company's Common Stock, a copy of which letter has been provided to the Purchasers. To the Company's knowledge, upon completion of the transaction contemplated by the Transaction Documents and the filing of a Current Report on Form 8-K with respect thereto, the Company will have at least 180 days to comply with the minimum bid requirements of Nasdaq to maintain its continued listing. 2.12 DISCLOSURE. No representation or warranty of the Company contained in this Agreement, the exhibits attached hereto or the SEC Documents, as updated by the disclosure letter dated concurrently herewith (when read together and taken as a whole), contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein in light of the circumstances under which they were made not misleading. 2.13 SOLICITATION. Neither the Company nor any of its subsidiaries or affiliates, nor any person acting on its or their behalf, (i) has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities or (ii) has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under any circumstances that would require registration of the Securities under the Securities Act. SECTION 3 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS ------------------------------------------------ Each Purchaser hereby represents and warrants to the Company as follows as of the Effective Date: 3.1 INVESTMENT. The Purchaser is acquiring the Securities and the Warrant for its own account, not as a nominee or agent and with no present intention of selling or otherwise distributing any of the Securities. Purchaser understands that, except as provided in the Registration Rights Agreement, the Securities purchased by the Purchaser from the Company pursuant to this Agreement have not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the Purchaser's investment intent and the accuracy of the Purchaser's representations as expressed herein. 3.2 ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as defined by Rule 501(a) of the Securities Act. The SEC Documents have been made available to the Purchaser. The Purchaser has such business and financial experience as is required to give it the capacity to protect its own interests in connection with the purchase of the Securities. 3.3 AUTHORITY. The Transaction Documents have been duly executed and delivered by the Purchaser and constitute legal, valid and binding obligations of the Purchaser, enforceable in accordance with their respective terms, subject to laws of general application relating to bankruptcy, insolvency and the relief -6- of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. The execution and delivery of the Transaction Documents do not, and the consummation of the transactions contemplated hereby and thereby will not, conflict with or result in any violation of any obligation under any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Purchaser. 3.4 GOVERNMENT CONSENTS, ETC. No consent, approval or authorization of or designation, declaration or filing with any governmental authority on the part of the Purchaser is required in connection with the valid execution and delivery of this Agreement, or the offer, sale or issuance of the Securities, or the consummation of any other transaction contemplated hereby other than those filings required the Exchange Act. 3.5 INVESTIGATION. The Purchaser has had a reasonable opportunity to discuss the Company's business, management and financial affairs with the Company's management. 3.6 BENEFICIAL OWNERSHIP OF COMMON STOCK. As of the Closing Date, the Purchasers may be deemed to beneficially own an aggregate of 50,000 shares of Common Stock of the Company (as determined in accordance with the rules of the Securities and Exchange Commission). SECTION 4 CONDITIONS TO OBLIGATIONS OF THE PURCHASERS ------------------------------------------- The obligations of each Purchaser to the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived by such Purchaser: 4.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and warranties made by the Company in Section 2 shall be true and correct in all material respects when made and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date. 4.2 COVENANTS. All covenants, agreements and conditions contained in this Agreement to be performed by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects. 4.3 NO ACTION, ETC. PENDING. There shall not at Closing be in effect any action, order, or other proceeding, preventing, enjoining or otherwise restraining the transactions contemplated by this Agreement. 4.4 NO LAW PROHIBITING OR RESTRICTING SALE. There shall not be in effect any law, rule or regulation prohibiting or restricting such sale, or requiring any consent or approval of any person to issue the Securities which shall not have been obtained (except as otherwise referenced in this Agreement). -7- 4.5 COMPLIANCE CERTIFICATE. The Company shall have delivered to the Purchasers a certificate substantially in the form attached hereto as EXHIBIT D executed by a duly authorized officer, dated the Closing Date, certifying to the fulfillment of the conditions specified in Sections 4.1 and 4.2 and certifying that, since the date of the Company's most recent filing with the SEC, there has not been any material adverse change in the business, properties, prospects, financial condition or operations of the Company; provided, however that changes in the ordinary course of business consistent with past practices, including but not limited to the use of cash and increases in liabilities in the ordinary course of business consistent with past practices, shall not be deemed to be a material adverse change. 4.6 RELATED AGREEMENTS. On or before the Closing, the Company, the Purchasers and Christopher Keene, as applicable, shall have executed and delivered counterparts of (i) the Voting Agreement in the form attached hereto as EXHIBIT B and (ii) the Registration Rights Agreement in the form attached hereto as EXHIBIT C. 4.7 DIRECTOR. Thomas Shanahan shall have been appointed, effective immediately after the Closing, to serve on the Company's Board of Directors as a Class III director. 4.8 LEGAL OPINION. The Purchasers shall have received a legal opinion from the Venture Law Group, counsel to the Company, in a form reasonably acceptable to the Purchasers. SECTION 5 CONDITIONS TO OBLIGATIONS OF THE COMPANY ---------------------------------------- The obligations of the Company under this Agreement are subject to the fulfillment on or prior to the Closing of each of the following conditions, unless otherwise waived by the Company: 5.1 REPRESENTATIONS AND WARRANTIES CORRECT. The representations and warranties made by the Purchasers in Section 3 hereof shall be true and correct in all material respects when made and on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date. 5.2 PERFORMANCE. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchaser on or prior to the Closing Date shall have been performed or complied with in all material respects. 5.3 NO ACTION, ETC. PENDING. There shall not at Closing be in effect any action, order or other proceeding, preventing, enjoining or otherwise restraining the transactions contemplated by this Agreement. 5.4 NO LAW PROHIBITING OR RESTRICTING SUCH SALE. There shall not be in effect any law, rule or regulation prohibiting or restricting such sale, or requiring any consent or approval of any person which shall not have been obtained to issue the Securities (except as otherwise provided in this Agreement). -8- SECTION 6 POST-CLOSING COVENANTS OF THE COMPANY ------------------------------------- 6.1 ELECTION OF DIRECTOR. For so long as the Purchasers beneficially own at least 11% of the issued and outstanding stock of the Company, the Purchasers shall have right to designate one member of the Board of Directors of the Company (the "PURCHASER DESIGNEE") (and to fill the vacancy of such member in the event of the resignation, death or removal of such member). The Purchaser Designee shall be required to complete a questionnaire in the same form as has been executed by all other directors for the Company. Subject to the fiduciary obligations of the Board of Directors to the Company's stockholders based on advice of legal counsel and the directors' review and approval (not to be unreasonably withheld) of such questionnaire and any other relevant information, in each case as applied on a consistent basis to each other director, the Company shall (i) nominate and recommend in the Company's proxy statement the Purchaser Designee as a Class III director of the Company's Board of Directors at each meeting of stockholders of the Company where the class of which the Purchaser Designee is a member is up for election, and (ii) in the event that the Purchaser Designee shall resign or be removed as a director for any reason during the period that this Section 6.1 is in effect, fill the vacancy resulting thereby with a Purchaser Designee. The Company shall provide all rights and benefits of indemnity to each Purchaser Designee as are provided to other outside directors of the Company. In the event of any business conflict of interest between the Purchaser Designee and another director or proposed director, the Board shall favor retaining the Purchaser Designee over such other director, and in any event if the Board of Directors does not approve a particular individual as the Purchaser Designee for the slate of Class III directors as a result of the process described in the second sentence of this paragraph, then the Purchasers shall designate a different Purchaser Designee, whom shall be subject to the same review and approval process. 6.2 CURRENT REPORT. As soon as reasonably practicable but in no event later than November 27, 2002, the Company shall file with the SEC on Form 8-K, a pro forma balance sheet (reflecting the effect of this Agreement and the transactions contemplated hereby) for the period ended September 30, 2002, that shows compliance with the Nasdaq stockholders equity listing requirements. 6.3 GOOD STANDING CERTIFICATES. The Company is currently not in good standing as a foreign corporation in Texas. The Company shall deliver to the Purchasers within five (5) business days after Closing a good standing certificate (with regard to both corporate status and franchise taxes) from the relevant authority in the State of Texas. SECTION 7 MISCELLANEOUS ------------- 7.1 GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. -9- 7.2 FILINGS. The parties shall consult and fully cooperate with and provide assistance to each other in preparing and filing as soon as practicable all consents, approvals and authorizations reasonably necessary or advisable to be made or obtained from any third-party or governmental agency in order to consummate the transactions contemplated hereby. 7.3 SURVIVAL. The representations and warranties of the Company and the Purchasers contained in or made pursuant to this Agreement shall terminate six (6) months following the Closing. The covenants in Section 6 shall survive for the terms stated therein. 7.4 SUCCESSORS AND ASSIGNS. Neither party may assign its rights or obligations under this Agreement, except with the prior written consent of the other party. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns. 7.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Warrant, the Voting Agreement, the Registration Rights Agreement and the other documents delivered pursuant hereto or contemplated hereby constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede all prior agreements and understandings among the parties relating to the subject matter hereof. Any term of this Agreement may be amended or waived only with the written consent of the Company and the Purchasers holding a majority of the Purchased Shares. Any amendment or waiver effected in accordance with this Section 7.5 shall be binding upon the Purchasers and each transferee of the Securities, each future holder of all such Securities, and the Company. 7.6 NOTICES AND DATES. Unless otherwise provided herein, any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier and addressed to the party to be notified at such party's address as set forth below, or to the Company at its address specified on its signature page hereto, or as subsequently modified by written notice. In the event that any date provided for in this Agreement falls on a Saturday, Sunday or legal holiday, such date shall be deemed extended to the next business day. If to the Company: Persistence Software, Inc. 1720 S. Amphlett Blvd, 3rd Floor San Mateo, CA 94402 Attn: Chris Keene, Chief Executive Officer With a copy to: Venture Law Group 2775 Sand Hill Road Menlo Park, CA 94025 Attn: Laurel Finch If to Purchasers: c/o Needham Capital Partners 3000 Sand Hill Road Building 2, Suite 190 Menlo Park, CA 94025 Attn: Thomas Shanahan -10- With a copy to: Kaye Scholer LLP 1995 Avenue of the Stars Suite 1700 Los Angeles, CA 90067 Attn: Barry Dastin 7.7 BROKERS. (a) The Company has not engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement. The Company hereby agrees to indemnify and hold harmless the Purchasers from and against all fees, commissions or other payments owing to any party acting on behalf of the Company hereunder. (b) No Purchaser has engaged, consented to or authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by this Agreement. Each Purchaser hereby agrees to indemnify and hold harmless the Company from and against all fees, commissions or other payments owing to any party acting on behalf of the Purchaser hereunder. 7.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 7.9 COSTS AND EXPENSES. Each party hereto shall pay its own costs and expenses incurred in connection herewith, including the fees of its counsel, auditors and other representatives, whether or not the transactions contemplated herein are consummated. 7.10 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall create or be deemed to create any rights in any person or entity not a party to this Agreement. 7.11 PUBLICITY. The Purchasers and the Company shall not issue any public statement concerning the transactions contemplated by this Agreement without the reasonable prior written consent of the parties named in such public statement; PROVIDED, HOWEVER, that the parties may disclose the transaction or the terms hereof or thereof from time to time without the approval of the party whose name is disclosed if (i) such approval has been requested and not received and such party concludes (after consulting with counsel) that it is required by law to disclose the transaction or the terms thereof or (ii) to the extent that similar disclosure has been previously approved pursuant to this Section 7.11. 7.12 CAPTIONS AND HEADINGS. The captions and headings used herein are for convenience and ease of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 7.13 COUNTERPARTS. This Agreement may be executed in counterparts, and each such counterpart shall be deemed an original for all purposes. [SIGNATURE PAGES FOLLOW] -11- IN WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase Agreement to be executed by their respective authorized officers as of the date first written above. PERSISTENCE SOFTWARE, INC. By: /S/ CHRISTINE RUSSELL ------------------------- Its: CHIEF FINANCIAL OFFICER SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT IN WITNESS WHEREOF, the parties hereto have caused this Common Stock Purchase Agreement to be executed by their respective authorized officers as of the date first written above. NEEDHAM CAPITAL PARTNERS III, L.P. By: /S/ THOMAS P. SHANAHAN ------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER NEEDHAM CAPITAL PARTNERS IIIA, L.P. By: /S/ THOMAS P. SHANAHAN ------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER NEEDHAM CAPITAL PARTNERS III (BERMUDA), L.P. By: /S/ THOMAS P. SHANAHAN ------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER SIGNATURE PAGE TO COMMON STOCK PURCHASE AGREEMENT SCHEDULE A SCHEDULE OF PURCHASERS - --------------------------------------------- ---------------- ---------------- PORTION OF PORTION OF NAME OF PURCHASER PURCHASED SHARES WARRANT SHARES - --------------------------------------------- ---------------- ---------------- Needham Capital Partners III, L.P. 2,891,761 927,171 - --------------------------------------------- ---------------- ---------------- Needham Capital Partners IIIA, L.P. 296,949 95,209 - --------------------------------------------- ---------------- ---------------- Needham Capital Partners III (Bermuda), L.P. 569,982 182,750 - --------------------------------------------- ---------------- ---------------- TOTAL 3,758,692 1,205,130 - --------------------------------------------- ---------------- ---------------- EXHIBIT A WARRANT EXHIBIT B VOTING AGREEMENT EXHIBIT C REGISTRATION RIGHTS AGREEMENT EXHIBIT D PERSISTENCE SOFTWARE, INC. COMPLIANCE CERTIFICATE The undersigned, Christopher T. Keene, hereby certifies as follows: 1. The undersigned is the duly elected President and Chief Executive Officer of Persistence Software, Inc., a Delaware corporation (the "COMPANY"). 2. The representations and warranties of the Company set forth in Section 2 of the Common Stock Purchase Agreement dated November 26, 2002 (the "AGREEMENT") are true and correct in all material respects as though made on and as of the date hereof. 3. The Company has performed and complied with all covenants, agreements, obligations and conditions contained in the Agreement to be performed by the Company on or prior to the Closing Date. 4. Since the date of the Company's most recent filing with the SEC, there has not been any material adverse change in the assets, liabilities, financial condition, or operations of the Company; provided, however that changes in the ordinary course of business consistent with past practices, including but not limited to the use of cash and increases in liabilities in the ordinary course of business consistent with past practices, shall not be deemed to be a material adverse change. The undersigned has executed this Certificate this ___ day of November, 2002. ------------------------------------- Christopher T. Keene President and Chief Executive Officer EX-10.20 4 persistence_8kex10-20.txt EXHIBIT 10.20 PERSISTENCE SOFTWARE, INC. REGISTRATION RIGHTS AGREEMENT NOVEMBER 26, 2002 PERSISTENCE SOFTWARE, INC. REGISTRATION RIGHTS AGREEMENT ----------------------------- This Registration Rights Agreement (the "AGREEMENT") is made as of the 26th day of November, 2002, by and among Persistence Software, Inc., a Delaware corporation (the "COMPANY"), and the entities listed on the signature pages hereto (each an "INVESTOR" and collectively the "INVESTORS"). RECITALS -------- The Company and the Investors have entered into a Common Stock Purchase Agreement (the "PURCHASE AGREEMENT") of even date herewith pursuant to which the Company has agreed to sell to the Investors and the Investors have agreed to purchase from the Company shares of the Company's Common Stock (the "PURCHASED SHARES") and warrants (the "WARRANTS") to purchase shares of the Company's Common Stock. All capitalized terms not otherwise defined herein shall have the meanings ascribed in the Purchase Agreement. A condition to each Investor's obligations under the Purchase Agreement is that the Company and the Investors enter into this Agreement in order to provide the Investor with certain rights to register the Shares (as defined below). The Company and the Investors each desire to induce the Investors to purchase the Securities pursuant to the Purchase Agreement by agreeing to the terms and conditions set forth herein. AGREEMENT --------- The parties hereby agree as follows: 1. REGISTRATION RIGHTS. The Company and the Investors covenant and agree as follows: 1.1 DEFINITIONS. For purposes of this Section 1 (terms defined in the singular shall apply to the plural form and vice-versa): (a) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act of 1933, as amended (the "ACT"), and the declaration or ordering of effectiveness of such registration statement or document by the SEC; (b) The term "REGISTRABLE SECURITIES" means (i) the shares of Common Stock issued or sold in connection with the Purchase Agreement and on exercise of the Warrants (such shares of Common Stock are collectively referred to hereinafter as the "SHARES" or "STOCK"), and (ii) any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the Stock, PROVIDED, that the foregoing definition shall exclude in all cases any Registrable Securities sold by a person in a transaction in which its rights under this Agreement are not assigned. Notwithstanding the foregoing, Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not (A) been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) been sold in a transaction exempt from the registration and prospectus delivery requirements of the Act under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale or (C) with regard to any individual Holder, become eligible for sale in any three month period pursuant to Rule 144; (c) The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be determined by the number of shares of Common Stock outstanding which are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities; (d) The term "HOLDER" means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with this Agreement; (e) The term "FORM S-3" means such form under the Act as in effect on the date hereof or any successor form under the Act; and (f) The term "SEC" means the Securities and Exchange Commission. 1.2 FORM S-3 REGISTRATION. (a) INITIAL REGISTRATION. Subject to the terms and conditions of this Agreement, on or before the date that is the earlier of: (i) 30 days after the Company files its Annual Report on Form 10-K for the year ended December 31, 2002 or (ii) April 30, 2003 (the "INITIAL S-3 FILING DEADLINE"), the Company will file with the SEC a registration statement on Form S-3 (the "INITIAL REGISTRATION") and will use its best efforts to effect such registration and any related qualification or compliance with respect to all Registrable Securities owned by the Holders as soon as practicable thereafter, subject to the Company's ability to defer filing a registration statement on Form S-3 pursuant to subsection 1.2(c)(ii)(1) or subsection 1.2(c)(ii)(2) below. (b) SECOND REGISTRATION. Subject to the terms and conditions of this Agreement and upon the written request of the Investors holding a majority of the Registrable Securities held by all Investors (the "SECOND REGISTRATION REQUEST"), on or before the date that is 30 days after the filing by the Company of the first periodic report (on either Form 10-Q or Form 10-K) required to be filed by the Company under the Securities Exchange Act of 1934, as amended ("EXCHANGE ACT") (the "NEXT PERIODIC REPORT") after receipt of the Second Registration Request, the Company will file with the SEC a registration statement on Form S-3 and will use its best efforts to effect such registration and any related qualification or compliance with respect to all Registrable Securities owned by the Holders as soon as practicable thereafter, subject to the Company's ability to defer filing a registration statement on Form S-3 pursuant to subsection 1.2(c)(ii)(1) or subsection 1.2(c)(ii)(2) below. -2- (c) MECHANICS. Pursuant to its obligations under Section 1.2(a) or Section 1.2(b) above, the Company will: (i) promptly give written notice of the registration, and any related qualification or compliance, to the Investors and any other holders of securities that have "piggyback" rights to register their shares in connection herewith (the "OTHER HOLDERS"); (ii) use its best efforts to effect, within 90 days after filing the registration statement, such registration and all such qualifications and compliances as may be necessary and as would permit or facilitate the sale and distribution of all of the Investors' Registrable Securities; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.2 if (1) the Company shall furnish to the Investors a certificate signed by the President of the Company stating that in the good faith reasonable judgment of the Board of Directors of the Company (with the concurrence of the managing underwriter, if any), the filing of a Form S-3 registration statement would adversely affect, or require premature disclosure of, any filing, financing, acquisition or reorganization involving the Company, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a reasonable period of time, which shall not exceed thirty (30) days after either the Initial S-3 Filing Deadline or the Second S-3 Filing Deadline, as applicable, under this Section 1.2 or (2) if Form S-3 is not available for such offering by the Investors provided, however, that if Form S-3 is not available, Company shall file the Form S-3 registration statement once it is available; and (iii) any and all expenses incurred in connection with a registration requested pursuant to this Section 1.2 shall be borne by the Company, including all registration, filing, qualification, printers' and accounting fees but excluding any underwriters' discounts or commissions or fees and disbursements for counsel to the Investors and the Other Holders, provided however that the Company shall reimburse the Holders for up to $25,000 in fees and disbursements for a single counsel for the Investors and the Other Holders. 1.3 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective and to keep such registration statement effective for the earlier of (i) in the event of a registration statement filed pursuant to Section 1.2(a) or 1.2(b), 18 months after the date on which the registration statement is declared effective; (ii) the date when all of the Registrable Securities covered by the registration statement are sold; or (iii) the date when Rule 144(k) is available with respect to all of the securities covered by such registration statement. -3- (b) Prepare and file with the SEC such amendments, including post-effective amendments, and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Act with respect to the disposition of all securities covered by such registration statement. (c) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them. (d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions. (e) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. In such circumstance, the Company will use reasonable commercial efforts to promptly update such prospectus to correct such untrue statement or disclose the necessary material facts within the period of time the Company may delay sales under Section 1.4(a)(iii) below. 1.4 RESTRICTIONS ON AND PROCEDURE FOR SALES PURSUANT TO A REGISTRATION STATEMENT. (a) Each Holder agrees to the following: (i) NOTICE TO COMPANY. If any Holder shall propose to sell any Shares, the Holder shall notify the Company of its intent to do so on or before one (1) business day prior to the date of such sale (the "NOTICE OF SALE"), and the provision of the Notice of Sale to the Company shall conclusively be deemed to establish an agreement by such Holder to comply with the registration provisions herein described. The Notice of Sale shall be deemed to constitute a representation that any information previously supplied by such Holder is accurate as of the date of such Notice of Sale. (ii) NOTICE OF SALE. The Notice of Sale in substantially the form attached as EXHIBIT A shall be given in accordance with the provisions of Section 3.5 hereof. However, the Holder may give the Notice of Sale orally by telephoning the current Chief Financial Officer at the Company at 650-372-3648. An oral Notice of Sale shall be deemed to have been received only at such time as the selling Holder speaks directly with the current Chief Financial Officer. In addition, an oral Notice of Sale shall only be deemed effective if it is followed by a written Notice of Sale received by the Company by personal delivery or facsimile within twenty-four (24) hours after giving the oral Notice of Sale. -4- (iii) DELAY OF SALE. The Company may refuse to permit the Holder to resell any Shares for a period of time not to exceed 30 days; provided, however, that in order to exercise this right, the Company must deliver a certificate in writing to the Holder to the effect that the registration statement in its then current form contains an untrue statement of material fact or omits to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. During any suspension period as contemplated by this Section 1.4 (a)(iii), of which there shall be no more than two (2) in any twelve (12) month period, the Company will not allow any of its officers or directors to buy or sell shares of the Company's securities. (b) REPRESENTATIONS OF HOLDERS. Each Holder hereby represents to and covenants with the Company that, during the period in which any registration statement effected pursuant to Section 1.2 remains effective, such Holder will: (i) not engage in any stabilization activity in connection with any of the Company's securities; (ii) cause to be furnished to any purchaser of the Shares and to the broker-dealer, if any, through whom Shares may be offered, a copy of the Prospectus; and (iii) not bid for or purchase any securities of the Company or any rights to acquire the Company's securities, or attempt to induce any person to purchase any of the Company's securities or any rights to acquire the Company's securities, in each case, other than as permitted under the Exchange Act. (c) INFORMATION FOR USE IN REGISTRATION STATEMENT. Each Holder covenants to the Company that such Holder will complete the information requested by the Selling Holder's Questionnaire attached as EXHIBIT B hereto (the "QUESTIONNAIRE"), and further covenants to the Company that all information provided by such Holder in the Questionnaire will be true, accurate and complete as of the date provided. Each Holder understands that the written information in the Questionnaire and all written representations made in this Agreement are being provided to the Company specifically for use in, or in connection with, the registration statement and the Prospectus, and has executed this Agreement with such knowledge. 1.5 FURNISH INFORMATION. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities. -5- 1.6 DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any dispute that might arise with respect to the interpretation or implementation of this Section 1. 1.7 INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under this Section 1: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, each Holder's affiliates, and their respective officers, directors, employees, representatives and agents, any underwriter (as defined in the Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "VIOLATION"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or (iii) any violation or alleged violation by the Company of the Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Act, the Exchange Act or any state securities law; and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.7(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person. (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.7(b), in connection with investigating or defending any such loss, claim, damage, -6- liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.7(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, that, in no event shall any indemnity under this subsection 1.7(b) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. (c) Promptly after receipt by an indemnified party under this Section 1.7 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.7, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.7, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.7. (d) If the indemnification provided for in this Section 1.7 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage, or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations; provided, that, in no event shall any contribution by a Holder under this Subsection 1.7(d) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) The obligations of the Company and Holders under this Section 1.7 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1. -7- 1.8 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144, so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Act and the Exchange Act; and (c) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act and the rules and regulations promulgated thereunder, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 1.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of at least 100,000 shares of such securities (subject to adjustment for stock splits, stock dividends, reclassification or the like); PROVIDED that the Company is furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and PROVIDED, FURTHER, that such assignment shall be effective only if the transferee agrees to be bound by this Agreement and such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Act. For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or spouses who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership; provided that all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under Section 1. 2. ADJUSTMENT TO WARRANT EXERCISE PRICE; LIQUIDATED DAMAGES. The Company and Investors agree that Investors will suffer damages if the Company fails to fulfill its obligations pursuant to Section 1 hereof and that it would not be possible to ascertain the extent of such damages with precision. Accordingly, (A) if the registration statement in connection with the First Registration is not declared effective by the SEC on or prior to 120 days after the earlier of the date the Company files its Annual Report on Form 10-K for the year ended December 31, 2002 or March 31, 2003, and/or (B) if the registration statement in connection with the Second Registration Request is not declared -8- effective by the SEC on or prior to 120 days after the filing of the Next Periodic Report, the Company, in each event, agrees that the per share Exercise Price of the Warrants shall be reduced by five percent (5%) from the Exercise Price then in effect as liquidated damages in connection therewith, PROVIDED HOWEVER that such 120 day periods shall be extended by any period in which the filing of a Registration Statement is deferred pursuant to Section 1.2(c)(ii). 3. MISCELLANEOUS. 3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 3.2 GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of laws. 3.3 COUNTERPARTS. This Agreement may be executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. 3.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 3.5 NOTICES. Unless otherwise provided herein, any notice required or permitted by this Agreement shall be in writing and shall be deemed duly given upon delivery, when delivered personally or by overnight courier or confirmed facsimile and addressed to a Holder to be notified at such party's address as set forth on the signature page hereto or to the Company at its address on its signature page hereto, or as subsequently modified by written notice. In the event that any date provided for in this Agreement falls on a Saturday, Sunday or legal holiday, such date shall be deemed extended to the next business day. Notwithstanding the foregoing, any notice delivered pursuant to Section 1.3(e) or Section 1.4 hereto must be made by personal delivery or confirmed facsimile transmission. 3.6 EXPENSES. If any action at law or in equity is necessary to enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 3.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the holders of -9- a majority of the Registrable Securities then outstanding. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities then outstanding, each future Holder of any such Registrable Securities, and the Company. 3.8 SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 3.9 ENTIRE AGREEMENT. This Agreement, and the Warrant, the Voting Agreement, and the Purchase Agreement all dated as of the date hereof, and the other documents delivered pursuant hereto or contemplated hereby constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede all prior agreements and understandings among the parties relating to the subject matter hereof. [SIGNATURE PAGES FOLLOW] -10- The parties have executed this Registration Rights Agreement as of the date first written above. COMPANY: PERSISTENCE SOFTWARE, INC. By: /S/ CHRISTINE RUSSELL ------------------------------ Name: CHRISTINE RUSSELL Title: CHIEF FINANCIAL OFFICER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT The parties have executed this Registration Rights Agreement as of the date first written above. NEEDHAM CAPITAL PARTNERS III, L.P. By: /S/ THOMAS P. SHANAHAN ------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER NEEDHAM CAPITAL PARTNERS IIIA, L.P. By: /S/ THOMAS P. SHANAHAN ------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER NEEDHAM CAPITAL PARTNERS III (BERMUDA), L.P. By: /S/ THOMAS P. SHANAHAN ------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT EXHIBIT A --------- PERSISTENCE SOFTWARE, INC. NOTICE OF SALE Pursuant to the Registration Rights Agreement dated as of November 26, 2002 by and between Persistence Software, Inc. (the "COMPANY") and the undersigned and other entities, the undersigned hereby gives notice to the Company of the undersigned's intent to sell _______ shares of the Company's Common Stock registered pursuant to the registration statement on (File No._____). Dated: ____________, 200__ By:_______________________________________ (signature) Name:_____________________________________ (print) Title:____________________________________ (if applicable) [NOTE: THIS NOTICE OF SALE MUST BE COMPLETED AND DELIVERED (VIA PERSONAL DELIVERY OR FACSIMILE) TO THE CHIEF FINANCIAL OFFICER OF THE COMPANY ON OR BEFORE ONE (1) BUSINESS DAY BEFORE THE DATE OF SALE OF THE SHARES OF THE COMPANY'S COMMON STOCK REGISTERED PURSUANT TO THE REGISTRATION STATEMENT.] EXHIBIT B --------- PERSISTENCE SOFTWARE, INC. SELLING STOCKHOLDER'S QUESTIONNAIRE In connection with the Persistence Software, Inc. (the "COMPANY") Registration Statement registering certain shares of the Company's Common Stock, the undersigned represents and warrants that the information set forth below is true, accurate and complete: 1. As of the date hereof, the undersigned beneficially owns ______ shares of the Company's Common Stock. 2. Except as described below, the undersigned has not had a material relationship with the Company or any of its predecessors or affiliates within the last three years. The term "material relationship" has not been defined by the Securities and Exchange Commission (the "SEC"). However, the SEC has indicated that it will probably construe as a "material relationship" any relationship which tends to prevent arms length bargaining in dealings with a company, whether arising from a close business connection or family relationship, a relationship of control or otherwise. It seems prudent, therefore, to consider that the undersigned would have such a relationship, for example, with any organization of which the undersigned is an officer, director, trustee or partner or in which the undersigned owns, directly or indirectly, ten percent (10%) or more of the outstanding voting stock, or in which the undersigned has some other substantial interest, and with any person or organization with whom the undersigned has, or with whom any relative or spouse (or any other person or organization as to which the undersigned has any of the foregoing other relationships) has, a contractual relationship. If applicable, please describe the material relationship with the Company: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ Holder ______________________________________ Name:_________________________________ Title:________________________________ EX-10.21 5 persistence_8kex10-21.txt EXHIBIT 10.21 VOTING AGREEMENT ---------------- VOTING AGREEMENT made as of November 26, 2002, between Christopher T. Keene ("STOCKHOLDER"), Persistence Software, Inc. (the "Company") and Needham Capital Partners III, L.P., Needham Capital Partners IIIA, L.P. and Needham Capital Partners III (Bermuda), L.P. (the "INVESTORS"). RECITALS On the date hereof the Company and Investors entered into a Purchase Agreement, Warrant Agreement and Registration Rights Agreement (collectively, the "TRANSACTION AGREEMENTS"). As an inducement to Investors to enter into the Transaction Agreements, Stockholder has agreed to vote in favor of one designee of the Investors to serve on the Company's Board of Directors on the terms set forth below. AGREEMENT NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows: 1. VOTING OF SHARES. During the term of this Agreement, Stockholder covenants and agrees with the Company and the Investors, for so long as such Stockholder shall be the owner of any Shares (as hereinafter defined) to vote (which term shall include taking action without a meeting by written consent) such number of Shares that may be voted by Stockholder in favor of the election and reelection as a Director of the Company of one individual designated in writing by a majority in interest of the Investors (the "INVESTORS DESIGNEE"). The Investors Designee shall initially be Thomas Shanahan. Upon the removal, resignation, death or failure to stand for reelection of the Investors Designee, Stockholder agrees to vote in favor of a successor designated in writing by a majority in interest of the Investors and to take such reasonable actions in his capacity as a stockholder of the Company as may be permitted to cause the members of the Board of Directors to elect a successor designated by a majority in interest of the Investors. Nothing herein shall require Stockholder to vote in favor of any Investors Designee as to whom disclosure would be required pursuant to Item 401(f) of Regulation S-K promulgated by the Securities and Exchange Commission or does not possess the necessary skills to serve as a director. 2. SHARES. the term "SHARES" as used herein shall mean any and all shares of capital stock of the Company which carry voting rights (including any voting rights which arise by reason of default) and shall include shares of Common Stock, par value $0.001 per share, of the Company now owned or subsequently acquired by Stockholder through purchase, gift, stock splits, stock dividends and exercise of stock options; provided, however, nothing contained herein shall be construed as to restrict the ability of Stockholder to sell, transfer or otherwise dispose of any Shares owned by Stockholder. 3. TERMINATION. This Agreement shall terminate on the date that the Investors beneficially own less than 11% of the issued and outstanding capital stock of the Company. 4. TRANSFERABILITY. Nothing herein shall limit the right of Stockholder to sell, convey or transfer any of his Shares; provided, however, that if Stockholder is transferring in excess of 50,000 Shares (subject to adjustment for stock splits, stock dividends or other combinations) other than through an open market transaction, Stockholder shall use his reasonable efforts to attempt to obtain such transferee's consent to vote such Shares in accordance with the terms of this Agreement. 5. NO REVOCATION. The voting agreement contained herein is coupled with an interest and may not be revoked prior to termination in accordance with Section 3, except by written consent of a majority in interest of the Investors, the Company and the Stockholder. 6. GOVERNING LAW. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. 7. SUCCESSORS AND ASSIGNS. No party may assign its rights or obligations under this Agreement, except with the prior written consent of the other party. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their permitted successors and assigns. 8. ENTIRE AGREEMENT; AMENDMENT. This Agreement, the Purchase Agreement, the Warrant, the Registration Rights Agreement and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede all prior agreements and understandings among the parties relating to the subject matter hereof. Neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against which enforcement of any such amendment, waiver, discharge or termination is sought. 9. NOTICES. Unless otherwise provided herein, any notice required or permitted by this Agreement shall be in writing and shall be deemed duly given upon delivery, when delivered personally or by overnight courier and addressed to the party to be notified at such party's address as set forth on the signature page hereto, or as subsequently modified by written notice. In the event that any date provided for in this Agreement falls on a Saturday, Sunday or legal holiday, such date shall be deemed extended to the next business day. 10. SEVERABILITY. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. -2- 11. CAPTIONS AND HEADINGS. The captions and headings used herein are for convenience and ease of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 12. COUNTERPARTS. This Agreement may be executed in counterparts, and each such counterpart shall be deemed an original for all purposes. [SIGNATURE PAGES FOLLOW] -3- IN WITNESS WHEREOF, the parties hereto have caused this Voting Agreement to be executed by their respective authorized officers as of the date first written above. STOCKHOLDER /S/ CHRISTOPHER T. KEENE -------------------------- Christopher T. Keene PERSISTENCE SOFTWARE, INC. By: /S/ CHRISTINE RUSSELL ------------------------------ Name: CHRISTINE RUSSELL Title: CHIEF FINANCIAL OFFICER NEEDHAM CAPITAL PARTNERS III, L.P. By: /S/ THOMAS P. SHANAHAN ------------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER NEEDHAM CAPITAL PARTNERS IIIA, L.P. By: /S/ THOMAS P. SHANAHAN ------------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER NEEDHAM CAPITAL PARTNERS III (BERMUDA), L.P. By: /S/ THOMAS P. SHANAHAN ------------------------------ Name: THOMAS P. SHANAHAN Title: GENERAL PARTNER SIGNATURE PAGE TO VOTING AGREEMENT EX-10.22 6 persistence_8kex10-22.txt EXHIBIT 10.22 THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY AN AFFILIATE OF THE COMPANY. NO SALE OR DISPOSITION OF THESE SHARES MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION RELATED THERETO OR IN COMPLIANCE WITH RULE 144 OR ITS SUCCESSOR OR PURSUANT TO AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. Warrant No.<> Number of Shares: <> (subject to adjustment) Date of Issuance: November 26, 2002 PERSISTENCE SOFTWARE, INC. COMMON STOCK WARRANT -------------------- Persistence Software, Inc. (the "COMPANY"), for value received equal to <>, hereby certifies that <> or its registered assigns ("NEEDHAM" or the "REGISTERED HOLDER"), is entitled, subject to the terms set forth below, to purchase from the Company, at any time after the date hereof and on or before the Expiration Date (as defined in Section 6 below), up to <> (<>) shares (as adjusted from time to time pursuant to the provisions of this Warrant) of Common Stock of the Company, at a per share Exercise Price equal to $0.75 (subject to adjustment for stock splits, dividends and the like and pursuant to that Registration Rights Agreement dated concurrently herewith by and among the Company, the Registered Holder and other affiliates of Needham). The shares purchasable upon exercise of this Warrant and the exercise price per share, as adjusted from time to time pursuant to the provisions of this Warrant and the Registration Rights Agreement, are hereinafter referred to as the "WARRANT STOCK" and the "EXERCISE PRICE," respectively. This Warrant is issued pursuant to that certain Common Stock Purchase Agreement dated approximately concurrently herewith among the Company and Needham and two other entities affiliated with Needham (the "PURCHASE AGREEMENT"). Any capitalized terms used herein, but not defined herein, shall carry those definitions ascribed to them in the Purchase Agreement. 1. FULLY VESTED SHARES. The shares of Warrant Stock are fully vested and exercisable as of the date of this Warrant. 2. EXERCISE. (a) METHOD OF EXERCISE. (i) This Warrant may be exercised by the Registered Holder, in whole or in part, by surrendering this Warrant, with the purchase/exercise form appended hereto as EXHIBIT A duly executed by such Registered Holder or by such Registered Holder's duly authorized attorney, at the principal office of the Company, or at such other office or agency as the Company may designate in writing prior to the date of such exercise, accompanied by payment in full of the Exercise Price payable in respect of the number of shares of Warrant Stock purchased upon such exercise. The Exercise Price may be paid by cash, check, wire transfer or by the surrender of promissory notes or other instruments representing indebtedness of the Company to the Registered Holder. (ii) In lieu of exercising this Warrant in the manner provided above in Section 2(a)(i), the Registered Holder may, solely in connection with a proposed Acquisition (and effective immediately prior to the closing of such Acquisition), elect to receive shares equal to the value of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with notice of such election on the purchase/exercise form appended hereto as EXHIBIT A duly executed by such Registered Holder or such Registered Holder's duly authorized attorney, in which event the Company shall issue to holder a number of shares of Common Stock computed using the following formula: X = Y (A - B) --------- A Where X = The number of shares of Common Stock to be issued to the Registered Holder. Y = The number of shares of Common Stock being exercised under this Warrant. A = The fair market value of one share of Common Stock (on the exercise date as calculated below) B = The Exercise Price (as adjusted to the exercise date). For purposes of this Section 2(a)(ii), the fair market value of one share of Common Stock on the exercise date shall mean the consideration per share to be received by the holders of Common Stock pursuant to such Acquisition, as calculated pursuant to the agreement governing such Acquisition. (b) EFFECTIVE TIME OF EXERCISE. Each exercise of this Warrant shall be deemed to have been effected immediately prior to the close of business on the day on which this Warrant shall have been surrendered to the Company as provided in Section 2(a) above. At such time, the person or persons in whose -2- name or names any certificates for Warrant Stock shall be issuable upon such exercise as provided in Section 2(c) below shall be deemed to have become the holder or holders of record of the Warrant Stock represented by such certificates. (c) DELIVERY TO HOLDER. As soon as practicable after the exercise of this Warrant in whole or in part, and in any event within 10 days thereafter, the Company at its expense will cause to be issued in the name of, and delivered to, the Registered Holder, or as such Registered Holder (upon payment by such Registered Holder of any applicable transfer taxes) may direct: (i) a certificate or certificates for the number of shares of Warrant Stock to which such Registered Holder shall be entitled, and (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof) of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of Warrant Stock equal (giving effect to any adjustment therein) to the number of such shares called for on the face of this Warrant minus the number of such shares purchased by the Registered Holder upon such exercise as provided in Section 2(a) above. 3. ADJUSTMENTS. (a) STOCK SPLITS AND DIVIDENDS. If the outstanding shares of the Company's Common Stock shall be subdivided into a greater number of shares or a dividend in Common Stock shall be paid in respect of Common Stock, the Exercise Price in effect immediately prior to such subdivision or at the record date of such dividend shall simultaneously with the effectiveness of such subdivision or immediately after the record date of such dividend be proportionately reduced. If outstanding shares of Common Stock shall be combined into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall, simultaneously with the effectiveness of such combination, be proportionately increased. When any adjustment is required to be made in the Exercise Price, the number of shares of Warrant Stock purchasable upon the exercise of this Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied by the Exercise Price in effect immediately prior to such adjustment, by (ii) the Exercise Price in effect immediately after such adjustment. (b) MERGER SALE, RECLASSIFICATION, ETC. In case of any (i) consolidation or merger (including a merger in which the Company is the surviving entity), (ii) sale or other disposition of all or substantially all of the Company's assets or distribution of property to shareholders (other than distributions payable out of earnings or retained earnings), or reclassification, change or conversion of the outstanding securities of the Company or of any reorganization of the Company (or any other corporation the stock or securities of which are at the time receivable upon the exercise of this Warrant) or any similar corporate reorganization on or after the date hereof, then and in each such case the holder of this Warrant, upon the exercise hereof at any time thereafter shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise hereof prior to such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization, the stock or other securities or property to which -3- such holder would have been entitled upon such consummation if such holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Section 3(a) or 3(b); and in each such case, the terms of this Section 3 shall be applicable to the shares of stock or other securities properly receivable upon the exercise of this Warrant after such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization. (c) ADJUSTMENT CERTIFICATE. When any adjustment is required to be made in the Warrant Stock or the Exercise Price pursuant to this Section 3, the Company shall promptly mail to the Registered Holder a certificate setting forth (i) a brief statement of the facts requiring such adjustment, (ii) the Exercise Price after such adjustment and (iii) the kind and amount of stock or other securities or property into which this Warrant shall be exercisable after such adjustment. 4. TRANSFERS. (a) UNREGISTERED SECURITY. Each holder of this Warrant acknowledges that this Warrant and the Warrant Stock have not been registered under the Securities Act of 1933, as amended (the "SECURITIES ACT"), and agrees not to sell, pledge, distribute, offer for sale, transfer or otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of (i) an effective registration statement under the Securities Act as to this Warrant or such Warrant Stock and registration or qualification of this Warrant or such Warrant Stock under any applicable U.S. federal or state securities law then in effect or (ii) an opinion of counsel, reasonably satisfactory to the Company, that such registration and qualification are not required. Each certificate or other instrument for Warrant Stock issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing effect. (b) TRANSFERABILITY. Subject to the provisions of Section 4(a) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, to (i) any entity controlling, controlled by or under common control of Needham, or (ii) to any other proposed transferee of at least 100,000 shares (as adjusted for stock splits, stock dividends, reclassifications and the like) by surrendering the Warrant with a properly executed assignment (in the form of EXHIBIT B hereto) at the principal office of the Company. (c) WARRANT REGISTER. The Company will maintain a register containing the names and addresses of the Registered Holders of this Warrant. Until any transfer of this Warrant is made in the warrant register, the Company may treat the Registered Holder of this Warrant as the absolute owner hereof for all purposes; PROVIDED, HOWEVER, that if this Warrant is properly assigned in blank, the Company may (but shall not be required to) treat the bearer hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary. Any Registered Holder may change such Registered Holder's address as shown on the warrant register by written notice to the Company requesting such change. 5. NO IMPAIRMENT. The Company will not, by amendment of its charter or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will (subject to Section 14 below) at -4- all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the holder of this Warrant against impairment. 6. TERMINATION. This Warrant (and the right to purchase securities upon exercise hereof) shall terminate on the earlier of: (i) November 26, 2007 or (ii) the closing of any sale of all or substantially all of the assets of the Company, or any merger, consolidation or any other transaction or series of related transactions in which the Company's stockholders immediately prior thereto own less than a majority of the voting stock of the Company (or its successor or parent) immediately thereafter (an "ACQUISITION") (the "EXPIRATION Date"). 7. NOTICES OF CERTAIN TRANSACTIONS. In case: (a) the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time deliverable upon the exercise of this Warrant) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, to subscribe for or purchase any shares of stock of any class or any other securities, or to receive any other right, or (b) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company, any consolidation or merger of the Company with or into another corporation (other than a consolidation or merger in which the Company is the surviving entity), or any transfer of all or substantially all of the assets of the Company, or (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company, then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up) are to be determined. 8. RESERVATION OF STOCK. The Company will at all times have authorized, reserve and keep available, solely for the issuance and delivery upon the exercise of this Warrant, such shares of Warrant Stock and other stock, securities and property, as from time to time shall be issuable upon the exercise of this Warrant. 9. EXCHANGE OF WARRANTS. Upon the surrender by the Registered Holder of any Warrant or Warrants, properly endorsed, to the Company at the principal office of the Company, the Company will, subject to the provisions of Section 4 hereof, issue and deliver to or upon the order of such Holder, at the Company's -5- expense, a new Warrant or Warrants of like tenor, in the name of such Registered Holder or as such Registered Holder (upon payment by such Registered Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered. 10. REPLACEMENT OF WARRANTS. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor. 11. NOTICES. Any notice required or permitted by this Warrant shall be in writing and shall be deemed duly given upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, or 48 hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, addressed (a) if to the Registered Holder, to the address of the Registered Holder most recently furnished in writing to the Company and (b) if to the Company, to the address set forth on the signature page of this Warrant or as subsequently modified by written notice to the Registered Holder. 12. NO RIGHTS AS STOCKHOLDER. Until the exercise of this Warrant, the Registered Holder of this Warrant shall not have or exercise any rights by virtue hereof as a stockholder of the Company. 13. NO FRACTIONAL SHARES. No fractional shares of Common Stock will be issued in connection with any exercise hereunder. In lieu of any fractional shares which would otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the fair market value of one share of Common Stock on the date of exercise, as determined in good faith by the Company's Board of Directors. 14. AMENDMENT OR WAIVER. Any term of this Warrant may be amended or waived upon written consent of the Company and the registered holders of at least 50% of the Common Stock issuable upon exercise of the outstanding warrants purchased pursuant to the Purchase Agreement. By acceptance hereof, the Registered Holder acknowledges that in the event the required consent is obtained, any term of this Warrant may be amended or waived with or without the consent of the Registered Holder; PROVIDED, HOWEVER, that any amendment hereof that would materially adversely affect the Registered Holder in a manner different from the holders of the remaining warrants issued pursuant to the Purchase Agreement shall also require the consent of Registered Holder. 15. HEADINGS. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant. 16. GOVERNING LAW. This Warrant and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. -6- 17. REGISTRATION RIGHTS. The Warrant Shares are subject to the re-sale registration rights described in the Registration Rights Agreement by and between the Company and Needham and dated concurrently herewith. 18. REPRESENTATIONS AND COVENANTS OF THE HOLDER. This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Registered Holder: (a) INVESTMENT PURPOSE. Needham is acquiring the Warrant and the Common Stock issuable upon exercise of the Warrant for its own account, not as a nominee or agent and with no present intention of selling or otherwise distributing any part thereof. (b) PRIVATE ISSUE. The Registered Holder understands, except as provided in the Registration Rights Agreement, (i) that neither the Warrant nor the Common Stock issuable upon exercise of this Warrant is, nor will be, registered under the Securities Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof pursuant to Section 4(2) of the Securities Act and any applicable state securities laws, and (ii) that the Company's reliance on such exemption is predicated on the representations set forth in this Section 18. (c) DISPOSITION OF HOLDER'S RIGHTS. In no event will the Registered Holder make a disposition of the Warrant or the Common Stock issuable upon exercise of the Warrant in the absence of (i) an effective registration statement under the Securities Act as to this Warrant or such Warrant Stock and registration or qualification of this Warrant or such Warrant Stock under any applicable U.S. federal or state securities law then in effect or (ii) an opinion of counsel, reasonably satisfactory to the Company, that such registration and qualification are not required. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Common Stock or Common Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of Common Stock when (1) such security shall have been effectively registered under the Securities Act and sold by the holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the Securities Act, or (3) a letter shall have been issued to the Registered Holder at its request by the staff of the Securities and Exchange Commission (the "SEC") or a ruling shall have been issued to the Registered Holder at its request by the SEC stating that no action shall be recommended by such staff or taken by SEC, as the case may be, if such security is transferred without registration under the Securities Act in accordance with the conditions set forth in such letter or ruling and such letter or ruling specifies that no subsequent restrictions on transfer are required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Registered Holder or holder of a share of Common Stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such holder, one or more new certificates for the Warrant or for such shares of Common Stock not bearing any restrictive legend. -7- (d) FINANCIAL RISK. The Registered Holder has such business and financial experience as is required to give it the capacity to protect its own interests in connection with its investment. (e) ACCREDITED INVESTOR. The Registered Holder is an "accredited investor" as defined by Rule 501 of Regulation D under the Securities Act, as presently in effect. 19. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. This Warrant has been entered into by Needham in reliance upon the following representations and covenants of the Company: (a) AUTHORIZATION: The Warrant has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies. (b) VALID ISSUANCE. The Warrant Stock is duly authorized and reserved for issuance, and when issued, sold and delivered in accordance with the terms of this Warrant will be duly and validly issued, fully paid and nonassessable. (c) NO CONFLICT. The execution and delivery of this Warrant do not, and the consummation of the transactions contemplated hereby will not, conflict with, or result in any violation of, breach or default (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit, under, any provision of the Certificate of Incorporation or Bylaws of the Company or any material agreement attached as an exhibit to the Company's SEC Documents (as defined in the Purchase Agreement), or any judgment, order, decree, statute, law, ordinance, rule, listing requirement or regulation applicable to the Company, its properties or assets, which conflict, violation, default or right would have a material adverse effect on the business, properties, prospects, financial condition or operations of the Company. 20. COUNTERPARTS. This Warrant may be executed in counterparts, and each such counterpart shall be deemed an original for all purposes. [SIGNATURE PAGES FOLLOW] -8- IN WITNESS WHEREOF, the parties have executed this Common Stock Warrant as of the date first above written. PERSISTENCE SOFTWARE, INC. By _________________________________________ Name:_______________________________________ (print) Title:______________________________________ Address: Persistence Software Inc. 1720 S. Amphlett Blvd, 3rd Floor San Mateo, CA 94402 Attention: Chief Financial Officer Fax Number: (650) 341-8432 AGREED TO AND ACCEPTED BY: <> By ________________________________________ Name: _____________________________________ (print) Title: ____________________________________ Address: 3000 Sand Hill Road Building 2, Suite 190 Menlo Park, CA 94025 Fax Number: (650) 854-9853 SIGNATURE PAGE TO COMMON STOCK WARRANT EXHIBIT A --------- PURCHASE/EXERCISE FORM ---------------------- To: Persistence Software, Inc. Dated: The undersigned, pursuant to the provisions set forth in the attached Warrant No. <>, hereby irrevocably elects: (a) to purchase _____ shares of the Common Stock covered by such Warrant and herewith makes payment of $ _________, representing the full purchase price for such shares at the price per share provided for in such Warrant, or (b) solely in connection with an Acquisition, to exercise such Warrant for _______ shares purchasable under the Warrant pursuant to the "net issue exercise" provisions of Section 2(a)(ii) of such Warrant. The undersigned acknowledges that it has reviewed the representations and warranties contained in Section 18 of the Warrant and by its signature below hereby makes such representations and warranties to the Company. Defined terms contained in such representations and warranties shall have the meanings assigned to them in the Warrant. Signature: ____________________________________ Name (print): _________________________________ Title (if applic.): ___________________________ Company (if applic.): _________________________ EXHIBIT B --------- ASSIGNMENT FORM --------------- FOR VALUE RECEIVED, _________________________________________ hereby sells, assigns and transfers all of the rights of the undersigned under the attached Warrant with respect to the number of shares of Common Stock covered thereby set forth below, unto: NAME OF ASSIGNEE ADDRESS/FAX NUMBER NO. OF SHARES ---------------- ------------------ ------------- Dated: _____________________ Signature:_______________________________ _______________________________ Witness: _______________________________ EX-99.1 7 persistence_8kex99-1.txt EXHIBIT 99.1 [PERSISTENCE LETTERHEAD / LOGO] FOR IMMEDIATE RELEASE PRESS RELEASE Editorial Contacts: Professional Investment Community and Media: - ------------------- -------------------------------------------- Rebecca Young Persistence Software, Inc. Joe Diaz or Michael Bailey 650-372-3661 RCG Capital Markets Group, Inc. ryoung@persistence.com (480) 675-0400 Ana Bolitho/Liz Barrass KAIZO Tel: + 44 (0) 20 7580 8852 ana.bolitho@kaizo.net or liz.barrass@kaizo.net PERSISTENCE SOFTWARE RECEIVES $2 MILLION EQUITY INVESTMENT FROM NEEDHAM CAPITAL PARTNERS SAN MATEO, CALIF. -- NOVEMBER 27, 2002 -- Persistence(R) Software (NASDAQ: PRSW), a provider of data services software for distributed data access and management, today announced that Needham Capital Partners has made a $2.0 million equity investment by purchasing 3,758,692 shares of newly issued Persistence common stock in a private placement at a price of $0.53 per share. The Company is not obligated to file a registration with the Securities and Exchange Commission in order to register the shares for resale until the later of 30 days after the Company files its Annual Report on Form 10-K for the year ended December 31, 2002 or April 30, 2003. Needham also received warrants to purchase an additional 1,205,130 shares at $0.75 per share. As part of the investment, Thomas P. Shanahan, General Partner of Needham Capital Partners, will join the Persistence Board of Directors. "We are pleased to begin an association with Persistence and its experienced management team," commented Tom Shanahan. "Having an investor of Needham's caliber take a significant position in our stock is an important validation of our business strategy," said Chris Keene, president and CEO of Persistence Software. "The Needham organization has long been one of the driving forces in the financing and development of emerging technologies. We believe that this commitment from an industry thought leader like Needham reinforces the business plan that Persistence management has developed and speaks to the compelling value proposition Persistence offers to customers worldwide." The Company intends to use the net proceeds from the financing for general corporate purposes. ABOUT PERSISTENCE Persistence Software provides a data services infrastructure that brings vital business information to global decision makers without the expense of replicated data centers. Global 2000 corporations can cost-effectively deliver vital information to professionals throughout the enterprise so actions can be taken to streamline business processes, improve supply chain management, boost employee productivity, enhance customer relationships and heighten levels of customer satisfaction. Persistence's innovative product family provides an improvement in the quality of the user experience by maintaining data integrity and accuracy at multiple levels throughout the enterprise without replicating databases. Customers of Persistence experience greater access to accurate information, quicker response times, improved productivity and increased scalability, all for lower cost than was previously possible. Persistence is the supplier to many Fortune 2000 companies who have complex, data-intensive applications that must support real-time decision making in many locations. Persistence Software's technology has been licensed to Cisco, Intel and Sun, and major customers in 2002 include Cablevision, Salomon Smith Barney, Fiducia, Motorola, i2 Technologies, Lucent, Nokia, EuroControl, Intershop, Applied Biosystems, Wells Fargo, Reuters and Kinetech. Persistence Software is headquartered in San Mateo, California. Please visit http://www.persistence.com for more information. ABOUT NEEDHAM CAPITAL PARTNERS Needham Capital Partners ("NCP") is part of Needham Asset Management, a fund management business with investment partnerships that invest in both public and private equities. Needham Capital Partners is affiliated with Needham & Company, Inc., a leading specialty U.S. investment bank focused on serving emerging growth companies. Needham & Company's research and investment banking professionals are in contact with potential portfolio companies and with the customers, suppliers and business partners of potential portfolio companies. Needham & Company's research and investment banking professionals provide an investment origination resource for NCP. Needham & Company was founded in 1985. It has worked as financial advisor and managed initial and follow-on public offerings for many of the leading companies in the technology and healthcare industries. ### Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements involving risks and uncertainties, which could cause actual results to differ materially from those in such forward-looking statements. Potential risks and uncertainties include, but are not limited to, Persistence Software's limited operating history; potential fluctuations in our operating results; our potential need to raise cash in the future; uncertainties related to our long sales cycle; our reliance on a relatively small number of customers; our dependence on revenues from EdgeXtend, which was only released in 2002; our dependence on the Java programming language and the Enterprise JavaBeans standard becoming widely accepted standards; our need to manage our resources or attract and retain the services of key employees; our need to deliver products that are free of defects and errors and meet rapidly changing technology standards and customer requirements; our need to build a strong direct sales team and develop third party sales channels; our dependence on enterprise-wide system deployments; and our need to address competition from companies with substantially greater resources. Further information regarding these and other risks and uncertainties is included in our Annual Report on Form 10-K for the year ended December 31, 2001, the Quarterly Forms on 10Q for the quarters ended March 31, 2002, June 30, 2002 and September 30, 2002 and in our other filings with the Securities and Exchange Commission. EX-99.2 8 persistence_8kex99-2.txt EXHIBIT 99.2 PERSISTENCE SOFTWARE, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands - Unaudited) AS OF SEPT 30, 2002 ------------------- BEFORE AFTER FINANCING FINANCING --------- --------- Assets: Current assets: Cash, cash equivalents and short-term investments $ 6,809 $ 8,809 Accounts receivable, net 2,516 2,516 Prepaids and other current assets 530 530 --------- --------- Total current assets 9,855 11,855 Property and equipment, net 484 484 Purchased technology, net 412 412 Deposits and other assets 66 66 --------- --------- Total assets $ 10,817 $ 12,817 ========= ========= Liabilities and Stockholders' Equity: Current liabilities: Accounts payable $ 567 $ 622 Accrued liabilities 1,731 1,731 Deferred revenues 2,534 2,534 Current portion of long-term obligations 799 799 --------- --------- Total current liabilities 5,631 5,686 Long-term liabilities: Long-term obligations 151 151 Long-term portion of deferred revenues 396 396 --------- --------- Total long-term liabilities 547 547 --------- --------- Total liabilities 6,178 6,233 --------- --------- Stockholders' equity: Common stock, net 64,103 66,048 Accumulated deficit (59,473) (59,473) Other 9 9 --------- --------- Total stockholders' equity 4,639 6,584 --------- --------- Total liabilities and stockholders' equity $ 10,817 $ 12,817 ========= ========= ### -----END PRIVACY-ENHANCED MESSAGE-----