Document:

<PAGE>   1
                                                                   EXHIBIT 10.16

                             SECURED PROMISSORY NOTE
                            (REVOLVING CREDIT LOANS)

$10,000,000                                             LOS ANGELES, CALIFORNIA
                                                        OCTOBER 29, 1999

        FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay to the
order of GREYROCK CAPITAL, a division of Banc of America Commercial Finance
Corporation (Greyrock), at 10880 Wilshire Blvd. Suite 950, Los Angeles, CA
90024, or at such other address as the holder of this Note shall direct, the
principal sum of $10,000,000, or so much of said sum as Greyrock shall have
advanced to Borrower pursuant to the Loan Agreement described below, payable on
the earlier of the following dates (the Maturity Date): (i) February 1, 2001, or
(ii) the date the Loan and Security Agreement between Borrower and Greyrock
dated OCTOBER 29, 1999 (the Loan Agreement) terminates by its terms or is
terminated by either party in accordance with its terms. On the Maturity Date
the entire remaining unpaid principal balance of this Note, plus any and all
accrued and unpaid interest, shall be due and payable.

        This Note shall bear interest on the unpaid principal balance hereof
from time to time outstanding at a rate equal to the following: The interest
rate in effect throughout each calendar month during the term of this Note shall
be the highest Prime Rate in effect during such month, plus 2% per annum,
provided that the interest rate in effect in each month shall not be less than
8% per annum. Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Prime Rate has the meaning set forth in the
Loan Agreement.

        Accrued interest on this Note shall be payable monthly, commencing on
October 31, 1999, and continuing on the last day of each succeeding month. Any
accrued interest not paid when due shall bear interest at the same rate as the
principal hereunder.

        Principal of and interest on this Note shall be payable in lawful money
of the United States of America. If a payment hereunder becomes due and payable
on a Saturday, Sunday or legal holiday, the due date thereof shall be extended
to the next succeeding business day, and interest shall be payable thereon
during such extension.

        In the event any payment of principal or interest on this Note is not
paid in full when due, or if any other default or event of default occurs
hereunder, under the Loan Agreement or under any other present or future
instrument, document, or agreement between Borrower and Greyrock (collectively,
Events of Default), Greyrock may, at its option, at any time thereafter, declare
the entire unpaid principal balance of this Note plus all accrued interest to be
immediately due and payable, without notice or demand. The acceptance of any
installment of principal or interest by Greyrock after the time when it becomes
due, as herein specified, shall not be held to establish a custom, or to waive
any rights of Greyrock to enforce payment when due of any further installments
or any other rights, nor shall any failure or delay to exercise any rights be
held to waive the same.

        All payments hereunder are to be applied first to costs and fees
referred to hereunder, second to the payment of accrued interest and the
remaining balance to the payment of principal. Any principal prepayment
hereunder shall be applied against principal payments in the inverse order of
maturity. Greyrock shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments hereunder.

        The Borrower agrees to pay all costs and expenses (including without
limitation attorney's fees) incurred by Greyrock in connection with or related
to this Note, or its enforcement, whether or not suit be brought. The Borrower
hereby waives presentment, demand for payment, notice of dishonor, notice of
nonpayment, protest, notice of protest, and any and all other notices and
demands in connection with the delivery, acceptance, performance, default, or
enforcement of this Note, and Borrower hereby waives

                                       1
<PAGE>   2

the benefits of any statute of limitations with respect to any action to
enforce, or otherwise related to, this Note.

        This Note is secured by the Loan Agreement and all other present and
future security agreements between Borrower and Greyrock. Nothing herein shall
be deemed to limit any of the terms or provisions of the Loan Agreement or any
other present or future document, instrument or agreement, between Borrower and
Greyrock, and all of Greyrock's rights and remedies hereunder and thereunder are
cumulative.

        In the event any one or more of the provisions of this Note shall for
any reason be held to be invalid, illegal or unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.

        No waiver or modification of any of the terms or provisions of this Note
shall be valid or binding unless set forth in a writing signed by a duly
authorized officer of Greyrock, and then only to the extent therein specifically
set forth. If more than one person executes this Note, their obligations
hereunder shall be joint and several.

GREYROCK AND BORROWER EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS
NOTE; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
GREYROCK AND BORROWER; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF GREYROCK OR
BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
ANY OTHER PERSONS AFFILIATED WITH GREYROCK OR BORROWER; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

        This Note is payable in, and shall be governed by the laws of, the State
of California.

                                             SOFTWARE TECHNOLOGIES CORPORATION

                                             By /s/ WILLIAM OVERELL
                                               ---------------------------------
                                             Title CHIEF FINANCIAL OFFICER
                                                   -----------------------------

                                       2

<PAGE>   3
                             SECURED PROMISSORY NOTE
                                   (TERM LOAN)

$10,000,000                                             LOS ANGELES, CALIFORNIA
                                                        OCTOBER 29, 1999

        FOR VALUE RECEIVED, the undersigned (Borrower) promises to pay to the
order of GREYROCK CAPITAL, a division of Banc of America Commercial Finance
Corporation (Greyrock), at 10880 Wilshire Blvd. Suite 950, Los Angeles, CA
90024, or at such other address as the holder of this Note shall direct, the
principal sum of $10,000,000, payable on the earlier of the following dates (the
Maturity Date): (i) February 1, 2001, or (ii) the date the Loan and Security
Agreement between Borrower and Greyrock dated OCTOBER 29, 1999 (the Loan
Agreement) terminates by its terms or is terminated by either party in
accordance with its terms. On the Maturity Date the entire remaining unpaid
principal balance of this Note, plus any and all accrued and unpaid interest,
shall be due and payable.

        This Note shall bear interest on the unpaid principal balance hereof
from time to time outstanding at a rate equal to the following: The interest
rate in effect throughout each calendar month during the term of this Note shall
be the highest Prime Rate in effect during such month, plus 2% per annum,
provided that the interest rate in effect in each month shall not be less than
8% per annum. Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. Prime ate has the meaning set forth in the
Loan Agreement.

        Accrued interest on this Note shall be payable monthly, commencing on
October 31, 1999, and continuing on the last day of each succeeding month. Any
accrued interest not paid when due shall bear interest at the same rate as the
principal hereunder.

        Principal of and interest on this Note shall be payable in lawful money
of the United States of America. If a payment hereunder becomes due and payable
on a Saturday, Sunday or legal holiday, the due date thereof shall be extended
to the next succeeding business day, and interest shall be payable thereon
during such extension.

        In the event any payment of principal or interest on this Note is not
paid in full when due, or if any other default or event of default occurs
hereunder, under the Loan Agreement or under any other present or future
instrument, document, or agreement between Borrower and Greyrock (collectively,
Events of Default), Greyrock may, at its option, at any time thereafter, declare
the entire unpaid principal balance of this Note plus all accrued interest to be
immediately due and payable, without notice or demand. The acceptance of any
installment of principal or interest by Greyrock after the time when it becomes
due, as herein specified, shall not be held to establish a custom, or to waive
any rights of Greyrock to enforce payment when due of any further installments
or any other rights, nor shall any failure or delay to exercise any rights be
held to waive the same.

        All payments hereunder are to be applied first to costs and fees
referred to hereunder, second to the payment of accrued interest and the
remaining balance to the payment of principal. Any principal prepayment
hereunder shall be applied against principal payments in the inverse order of
maturity. Greyrock shall have the continuing and exclusive right to apply or
reverse and reapply any and all payments hereunder.

        The Borrower agrees to pay all costs and expenses (including without
limitation attorney's fees) incurred by Greyrock in connection with or related
to this Note, or its enforcement, whether or not suit be brought. The Borrower
hereby waives presentment, demand for payment, notice of dishonor, notice of
nonpayment, protest, notice of protest, and any and all other notices and
demands in connection with the delivery, acceptance, performance, default, or
enforcement of this Note, and Borrower hereby waives

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<PAGE>   4

the benefits of any statute of limitations with respect to any action to
enforce, or otherwise related to, this Note.

        This Note is secured by the Loan Agreement and all other present and
future security agreements between Borrower and Greyrock. Nothing herein shall
be deemed to limit any of the terms or provisions of the Loan Agreement or any
other present or future document, instrument or agreement, between Borrower and
Greyrock, and all of Greyrock's rights and remedies hereunder and thereunder are
cumulative.

        In the event any one or more of the provisions of this Note shall for
any reason be held to be invalid, illegal or unenforceable, the same shall not
affect any other provision of this Note and the remaining provisions of this
Note shall remain in full force and effect.

        No waiver or modification of any of the terms or provisions of this Note
shall be valid or binding unless set forth in a writing signed by a duly
authorized officer of Greyrock, and then only to the extent therein specifically
set forth. If more than one person executes this Note, their obligations
hereunder shall be joint and several.

GREYROCK AND BORROWER EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION
OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO: (i) THIS
NOTE; OR (ii) ANY OTHER PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN
GREYROCK AND BORROWER; OR (iii) ANY CONDUCT, ACTS OR OMISSIONS OF GREYROCK OR
BORROWER OR ANY OF THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR
ANY OTHER PERSONS AFFILIATED WITH GREYROCK OR BORROWER; IN EACH OF THE FOREGOING
CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

        This Note is payable in, and shall be governed by the laws of, the State
of California.

                                             SOFTWARE TECHNOLOGIES CORPORATION

                                             By /s/ WILLIAM OVERELL
                                               ---------------------------------
                                             Title CHIEF FINANCIAL OFFICER
                                                   -----------------------------

                                       4<PAGE>

                                           ****CONFIDENTIAL TREATMENT REQUESTED:
                                               OMITTED PORTIONS HAVE BEEN FILED
                                               SEPARATELY WITH THE COMMISSION

                                                                    Exhibit 10.8
[LOGO]

         Persistence Software License, Services, and Support Agreement

This Customer Agreement and Attached License Addendum (the "Agreement") is
entered into by and between the parties set forth immediately below as of
December 31, 1998 (the "Effective Date") and shall remain in effect until
terminated as set forth in this Agreement:

Persistence Software, Inc.,                   Intershop Communications GmbH
1720 South Amphlett Boulevard, Third Floor    and its Affiliates
San Mateo, CA 94402                           Leutragraben 2-4
     ("PSI")                                  07743 Jena Germany
                                                  ("Intershop")

  "Intershop" as defined in this agreement is a(n): VAR [X]  End-User __

  Application developed with Software: "Intershop 4" or "Intershop 2000" (code-
                                       ---------------------------------------
  named "Beehive"/1)/
  -------------------

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
   Item      Description                                                      Unit Price          Net Price
   ----      -----------                                                      ----------          ---------
---------------------------------------------------------------------------------------------------------------------
   <S>       <C>                                                              <C>                 <C>
    1.       12 x PowerTier Builder for EJB License                           $****                $****
             (to be invoiced immediately)

    2.       12 x PowerTier Link for Rational Rose License                    $****                $****
             (to be invoiced immediately)

    3.       2 x PowerTier Server Development Runtime License                 $****                $****
             (to be invoiced immediately)

    4.       12 months Maintenance Services on Items 1-3 @                     ****%               $****
             ****% of license fee (to be invoiced immediately)

    5.       Pre-payment for additional PowerTier Licenses,                                        $****
             Maintenance Services and/or Royalties (as defined
             below) (to be invoiced immediately)

    6.       33 days of professional services (see Note 1 on this             $****                $****
             Cover Sheet for further details)
             (to be invoiced immediately)

    7.       Pre-payment for additional PowerTier Licenses,                                        $****
             Maintenance Services and/or Royalties
             (to be invoiced upon completion of certain tasks as
             specified in Note 2 on this Cover Sheet).

    8.       Royalties (as defined in Note 3 of this Cover Sheet)                ****%                ****%
             (to be invoiced monthly)
---------------------------------------------------------------------------------------------------------------------
</TABLE>

_______________________

/1/ Beehive is a new architecture meets the needs of the both the marketplace
(i.e. the new digital intermediary), and future models of electronic commerce by
providing an object-oriented, extensible framework on which this application and
future applications can be built and deployed. Not only does the Beehive
architecture support new and evolving models of eCommerce, but it also supports
existing models such as the Mall and Single Supplier/Store. A standardized
framework provides consistent practices regarding customization, which enable
quicker implementation and customization for Intershop's customers and
Intershop's professional services group. Beehive and products that run on the
Beehive platform and applications that incorporate the PowerTier runtime are
expected to be Intershop's a primary revenue stream in 1999 and Intershop's
principle revenue stream in 2000

<PAGE>

                                           ****CONFIDENTIAL TREATMENT REQUESTED:
                                               OMITTED PORTIONS HAVE BEEN FILED
                                               SEPARATELY WITH THE COMMISSION
<TABLE>
-----------------------------------------------------------------------------------------------------------
   <S>       <C>                                                     <C>                   <C>
    9.       Maintenance Services for Software sold subject to       ****%                 ****%
             Royalty payments
             (to be invoiced at the same time as Royalties)

    10.      Option to reduce royalties by ****%                                           $****
             (see Note 4 of this Cover Sheet)

    11.      Charge for each copy of "PowerTier Developer Pack"      $****
             (defined as 1 x PowerTier Object Builder + 1 x
             PowerTier Link for Rose) that is sold as part of an
             Intershop product.
             (see Note 5 of this Cover Sheet)

    12.      Use of GUT (see Note 6 of this Cover Sheet)             ****

-----------------------------------------------------------------------------------------------------------
</TABLE>

The parties acknowledge that license, service, and, support, are subject to the
terms of the Agreement attached hereto and agree to the terms contained therein.

NOTE 1: Each visit to Intershop's offices in Jena will involve maximum 1 day
travelling time which shall be charged at the daily rate. All actual, pre-
approved and reasonable expenses incurred in carrying out any professional
services for Intershop will be re-charged to Intershop at cost. This will
include, but is not limited to, all travel costs, hotel costs, car hire, and $60
per day for incidental expenses such as meals, telephone etc.

NOTE 2: Attached to this Agreement as Exhibit C is a document describing the
enhancements to PowerTier that Persistence will develop and deliver either
before or as part of the release of PowerTier/EJB currently known as "Stingray".
Once these enhancements have been delivered, Intershop will be invoiced for Item
7 above.

NOTE 3: Royalties at the rate specified in Item 8 above shall be charged on all
Intershop net revenues (net of any sales tax) generated by products containing
the PowerTier Server Production Runtime, including net revenues received by
Intershop resulting products developed and distributed by third parties and
which contain the PowerTier Server Production Runtime. Royalties at the rate
specified in Item 8 above shall also be charged on all Intershop revenues (net
of any sales tax) generated by products containing the PowerTier Object Builder
subject to the limitations defined in Note 5 of this Cover Sheet. For purposes
of this Note 3, "net revenue" means gross revenues, less any applicable sales,
use, or withholding taxes, or any applicable ad valorem taxes.

NOTE 4: This option specified as Item 10 on the Cover Page of this Agreement can
be exercised by Intershop at any time. The ****% reduction will come into effect
3 months after Intershop pays to Persistence the sum specified in item 8
above $**** of this payment will be counted as a prepayment against future
PowerTier Licenses, Maintenance Services and/or Royalties.

NOTE 5: Intershop is entitled to resell only 2 copies of the PowerTier Developer
Pack to each End User subject to the Royalty amount specified in Item 8 above.
Any additional sales of PowerTier Developer Pack shall be subject to the charge
specified in Item 11 above. In any event, all PowerTier Developer Packs resold
to End Users shall require Intershop to contractually limit use of the PowerTier
Developer Pack to work related to the End-User's use of Beehive.

NOTE 6: Intershop agrees that any use of GUT will be entirely at their own risk
and will be unsupported. Intershop will be responsible for the maintenance of
any code generated by GUT, and support for any PowerTier generated code that
contains GUT-generated code will only be provided if the problem can be
reproduced with the GUT-generated code removed. Intershop also agrees that GUT
and any documentation relating to GUT is entirely confidential and therefore
specifically and especially covered by clauses 2.1.3, 3 and 10. Under no
circumstances may GUT be used by anyone other than Intershop employees, and
under no circumstances may GUT be used other than at Intershop premises. PSI
will give good faith consideration to allowing Intershop to sublicense GUT to
Intershop's customers.
<PAGE>

AGREED AND ACCEPTED:
Persistence Software, Inc.           Intershop Communications Gmbh

By: /s/ Martin McCure                By: /s/ Stephan Schambach
    -----------------------              ---------------------------

Name: Martin McCure                  Name:   STEPHAN SCHAMBACH
      ---------------------                 ------------------------

Title: CONTROLLER                    Title: ________________________
      ---------------------

Date:   12/31/98                     Date:   12/31/98
      ---------------------                  -----------------------

                                       3

<PAGE>

Persistence Software License, Services, and Support Agreement
--------------------------------------------------------------------------------

                             Persistence Software

                   License, Services, and Support Agreement

1.   Definitions.

     1.1.   "Application" means any software application developed by Intershop
using the Software or including any Objects. Intershop represents and warrants
that the description of the Application set forth on the Cover Sheet is true and
correct.

     1.2.   "Cover Sheet" means the cover page to this Agreement.

     1.3.   "End User(s)" means (a) if Intershop is a VAR, end user customers of
VAR which acquire the Application for their business purposes and not for resale
or for any other purpose, or (b) Intershop itself, if Intershop is licensing the
Software for its own use as set forth on the Cover Sheet.

     1.4.   "Maintenance Services" means the provision of releases under Section
8, if purchased as set forth on the Cover Sheet.

     1.5.   "Objects" means objects generated by Intershop's use of the Software
in accordance with its documentation, however Objects shall not be deemed to
include any example or demonstration objects included with the Software.

     1.6.   "Object Code" means the machine executable version of a software
program.

     1.7.   "PowerTier" means PSI's proprietary Object Server middleware
application server which manages an object cache containing data from a database
and all documentation thereto, as delivered to Intershop hereunder.

     1.8.   "Professional Services" means consulting services provided on a per-
day basis as set forth on the Cover Sheet.

     1.9.   "Releases" means all revisions, updates, modifications or
enhancements PSI may make to the Software under the Agreement.

     1.10.  "Services" means the Professional Services, the Support Services,
and the Maintenance Services.

     1.11.  "Software" means the PSI software programs listed on the Cover
Sheet.

     1.12.  "Support Services" means the Support Services as set forth in
Section 8, if purchased as set forth on the Cover Sheet.

     1.13.  "VAR" means value-added applications integrators licensed under this
Agreement to develop and license end-user applications integrating the Objects.

     1.14.  "Work Product" means any application developed in a Rapid
Applications Development Lab and/or any code written by PSI personnel.

                                       1
<PAGE>

     1.15. "Affiliates" means any corporation, partnership, joint venture or
other entity or person controlled by Intershop Communications AG. For purposes
of this definition, the term "control" shall mean the direct or indirect
beneficial ownership of 50% or more of the voting interests (representing the
right to vote for the election of directors or other managing authority) in an
entity.

2.   License.

     2.1.  VAR License. If Intershop is a VAR, the terms of this Section 2.1
shall apply.

           2.1.1.  Development and Deployment License. Subject to the terms and
conditions of this Agreement, PSI hereby grants VAR a worldwide non-exclusive,
nontransferable, limited, fee-bearing license to use the Software internally,
only in Object Code and only in the environment(s) set forth on the Cover Sheet,
solely for purposes of: (i) developing the Application(s) and creating Objects,
(ii) demonstrating the Application(s) to potential customers, (iii) providing
training in the use of the Application(s) to VAR's employees and End Users, and
(iv) providing support for the Application(s) and Objects to End Users.

           2.1.2.  Limited Distribution License. Subject to the terms and
conditions of this Agreement, and limited to the number of Licenses purchased as
detailed on the Cover Page of this Agreement, PSI grants VAR a non-exclusive,
royalty-bearing, non-transferable license to reproduce, translate into spoken
languages, distribute (by any means known or hereafter developed, including
electronic distribution), sublicense, market, promote and grant third parties
such rights regarding the PowerTier Software, but solely (i) in Object Code,
(ii) only when embedded in an Application or sold as part of or in connection
with VAR's standard products. Intershop will distribute the Applications and
documentation under terms not materially less protective of the rights of PSI
than those Intershop uses for its other products or in accordance with a license
agreement substantially similar to the end user license agreement terms attached
hereto as Exhibit A (which may be amended from time to time in PSI's sole
          ---------
discretion). In addition, PSI grants VAR a non-exclusive, non-royalty-bearing,
non-transferable license to prepare, use, reproduce, translate, sublicense,
market, promote and distribute derivative works (such derivative works will be
subject to PSI's prior approval) of the associated documentation to incorporate
in Intershop's documentation for the Applications. Intershop may grant to its
distribution channels (including original equipment manufacturers) the rights
set forth above., give them approval rights of any derivative works

           2.1.3.  Limited Right to Reproduce. Subject to the terms and
conditions of this Agreement, PSI hereby grants VAR a non-exclusive, non-
transferable, limited license to make up to five (5) copies of the Software, in
Object Code only, and only for archival or backup purposes. VAR shall not
modify, translate or create derivative works of all or any part of the Software.
VAR may not distribute such archived or backup copies and such must be kept on
VAR's premises.

           2.1.4.  Trademark License. Intershop and its channels of distribution
may but are not required to use PSI trademarks and logos set forth in Exhibit B
applicable to the Software in connection with the activities contemplated under
this

                                       2
<PAGE>

Agreement. On PSI's request, Intershop will furnish PSI with a sample of such
trademark usage. Subject to the terms and conditions of this Agreement, PSI
hereby grants VAR a non-exclusive, non-transferable license to use the PSI
trademarks, trade names and logos set forth in Exhibit B (as amended from time
                                               ----------
to time by PSI in its sole discretion) (the "Marks"), solely in connection with
the marketing of copies of the Application(s). Except for the right to use Marks
as set forth in this Section, nothing contained in this Agreement shall be
construed to grant VAR any right, title or interest in or to any trademarks,
trade names or logos of PSI or any third party supplier to PSI. VAR shall not
challenge PSI's ownership of the Marks. VAR will maintain a high quality
standard in producing and marketing the Application(s).

           2.1.5. Proprietary Rights Notice. VAR agrees to reproduce and include
any copyright or other proprietary rights notices of PSI in all copies, in whole
or in part, of the Software. VAR need not include a copyright notice on any
Application(s), except on the inside front cover of any associated
documentation. VAR will not in any case remove or alter any proprietary notices
on or in the Software; however in no event will VAR be requited to include, or
reproduce a copyright or other proprietary notice on the Application.

     2.2.  End User License. If Intershop is an End User, subject to the terms
and conditions of this agreement, PSI grants Intershop a personal, non-
exclusive, nontransferable, restricted right to use one or more copies of the
Software, as set forth on the Cover Sheet or the applicable license certificates
in the country in which Intershop acquired the software for Intershop's own
internal business purposes. Such use shall consist of loading the software into
the temporary memory (i.e., RAM) or installing the software on the permanent
memory (e.g., hard disk, CD-ROM, or other storage device) of the number of
computers set forth on the Cover Sheet. Intershop may not permit multiple users
to use the software over a network or by other means unless so specified on the
applicable license certificate. Intershop may either (i) make one (1) copy of
the software solely for purposes of having a backup copy, provided that
Intershop reproduce on that copy all copyright notices and any other
confidentiality or proprietary legends that are on the original copy of the
software, or (ii) transfer the software to a single hard disk provided Intershop
keep the original solely as a backup copy. Intershop may transfer its permitted
copies of the software to different computers only if Intershop removes the copy
in its entirety from the prior computer and does not exceed the total allowable
number of copies. Intershop understands that PSI may update the Software at any
time and, except as set forth herein, in doing so incurs no obligation to
furnish such updates to Intershop pursuant to this Agreement unless Intershop
pays PSI separately for such updates and Intershop agrees that such updates, if
any, shall be subject to this Agreement. All Software and any Releases will be
delivered hereunder F.O.B. PSI facilities and will be deemed accepted upon
delivery.

     2.3.  Reservation of Rights. PSI reserves all rights in the Software and in
any intellectual property rights PSI may create or acquire by performing
Services which are not expressly granted to Intershop in this Agreement.

3.   No Reverse Engineering. Except as expressly permitted by applicable law,
Intershop shall not decompile, reverse engineer or otherwise attempt to derive,
obtain or modify the source code of the Software, or assist or encourage any
third party to do so. If Intershop is a VAR Intershop further agrees that End
Users shall not be provided with access

                                       3
<PAGE>

to any source code for the Software, and shall not be permitted to modify the
functionality of the any Application in any way.

4.   Ownership.

     PSI retains title to the Software. PSI Shall have no ownership interest in
Intershop's products (including the Applications), other than the rights in the
Software described in the preceding sentence. Customer acknowledges that the
licenses granted pursuant to this Agreement do not provide Customer with any
right, title or ownership of the Software or any PSI intellectual property right
except the license rights expressly granted herein or as otherwise identified
below.

5.   Fees and Payment.

     5.1.  Software Use License Payment. Intershop shall pay PSI the fee set
forth on the Cover Sheet in U.S. Dollars. Intershop agrees to pay the fee within
thirty (30) days of the Effective Date of this Agreement.

     5.2.  PowerTier and Object Deployment Fees and Payment. Intershop shall pay
PSI in full for all items specified on the Cover Sheet in U.S. Dollars within
thirty (30) days of any invoice being raised (for royalty payments, such
invoices will be raised quarterly) by PSI for said items. For each End User to
which an Application has been delivered the Intershop shall maintain (but need
only deliver to PSI only information reasonably needed by PSI to verify the
calculation of quarterly royalties payable) the following detailed information:
company name and location, technical support contact, phone/fax numbers,
hardware and database platforms used, number of copies of the Application(s)
licensed, and sales value of the Application(s) delivered to the end-user.
Payment by Intershop shall include support for each End User as set forth
herein.

     5.3.  Services Payments.

           5.3.1.  PSI will invoice Intershop upon the Effective Date for the
initial year of this Agreement and thereafter within ninety (90) days prior to
the end of each subsequent year of this Agreement for the applicable annual
Support Services fees and Maintenance Services fees for the subsequent year. All
payments shall be made by Intershop to PSI in U.S. Dollars within thirty (30)
days of issuance of invoice. If Intershop does not pay PSI such amounts prior to
the beginning of the next year of this Agreement, then PSI may elect to withhold
from Intershop such Support Services. The withholding of Support Services by PSI
does not release Intershop from any obligations arising from this Agreement nor
does it release Intershop from the obligation to pay for Support Services
contracted for in this Agreement nor does it constitute a breach of this
Agreement.

           5.3.2.  PSI shall invoice Intershop monthly for any Professional
Services All payments shall be made by Intershop to PSI in U.S. Dollars within
thirty (30) days of issuance of invoice for Professional Services.

     5.4. Incidental Expenses. Intershop shall reimburse PSI for all pre-
approved and reasonable travel and living expenses incurred by PSI in
conjunction with performing the

                                       4

<PAGE>

Professional Services if performance of such services include any visits to
Intershop's facilities. All payments shall be made by Intershop to PSI in U.S.
Dollars within thirty (30) days of issuance of invoice for Incidental Expenses.

     5.5.  Taxes and Interest. The fees set forth herein exclude all applicable
sales, use and other taxes, and Intershop will be responsible for payment of all
such taxes (except those based on PSI's income), fees, duties and charges, and
any related penalties and interest arising from the payment of the fees. Any
portion of the fees set forth above that is not paid when due will accrue
interest at a rate of one and one half percent (1.5%) per month or the maximum
rate permitted by applicable law, whichever is less, from the due date until
paid.

     5.6.  Records and Audit. Intershop shall maintain complete, clear, accurate
records of the number of units of Applications distributed, sold or otherwise
transferred or deployed, returns and credits therefor, and payments received.
Upon 10 days' prior notice, PSI shall have the right to have an inspection and
audit of all the relevant accounting and sales books and records of Intershop
conducted by an auditor reasonably acceptable to both parties. Any such audit
shall be upon reasonable written notice and shall be conducted during normal
business hours no more than twice per year. If any such audit should disclose
any underreporting or underpayment of amounts due, Intershop shall promptly pay
PSI such amounts, including applicable interest. If the underreporting exceeds
five percent (5%) of the total amounts due, Intershop shall bear the cost of
such audit.

6.   Delivery. PSI shall deliver a License Certificate corresponding to the
number of concurrent users and type of Software specified on the Cover Sheet to
Intershop within fifteen (15) business days after execution of this Agreement.
The Software shall be deemed accepted by Intershop upon delivery to Intershop.

7.   ESCROW

     Concurrently with the execution of this Agreement, Intershop, PSI and an
escrow agent mutually acceptable to the parties shall enter into a software
escrow agreement upon terms and conditions mutually agreeable to the parties
which shall provide for the release of the source code of the Software to
Intershop for the purposes and upon the occurrence of the release conditions
described in Exhibit D hereto.

8.   Maintenance Services.

     8.1  Support of Intershop. PSI agrees to provide Intershop with the
technical support, error corrections, bug fixes, enhancements, ports to
additional platforms, upgrades and updates with respect to the Software and
Documentation as further described in Exhibit C.

     8.2  End User Support. PSI shall provide back-end support to Intershop, as
further described in Exhibit C, but shall not be required to provide front-line
support to end users of the Applications ("End Users"). Intershop may, in its
sole discretion, determine the terms and conditions of such support and charge
End Users a fee in connection therewith.

     8.3  Training of Intershop. PSI shall provide training to Intershop

                                       5
<PAGE>

employees, independent contractors and consultants in accordance with the
provisions set forth in Exhibit C.

9.   Professional Services. PSI will provide Professional Services to Intershop
as defined in Section 1.8.

     9.1  Fees. Professional Services are provided on a daily fee basis as
detailed on the Cover Sheet of this agreement. Professional Services are
additive to, and not included in, fees paid for Support and Maintenance
Services. Payment for Professional Services by Intershop to PSI shall be made in
U.S. Dollars within thirty (30) days of issuance of invoice for Professional
Services.

     9.2  Method of Performing Services. PSI will determine the method, details,
and means of performing the work to be carried out for Intershop. Intershop
shall have no right to and shall not, control the manner or determine the method
of accomplishing such work. Intershop may, however, require PSI's personnel to
observe at all times the security and safety policies of Intershop. In addition,
Intershop shall be entitled to exercise a broad general power of supervision and
control of the results of work performed by PSI personnel to ensure satisfactory
performance including the right to inspect, stop work, make suggestions or
recommendations as to the detail of the work.

     9.3  Scheduling. PSI will attempt to accommodate work schedule requests of
the Intershop to the extent possible. Should any personnel of PSI be unable to
perform scheduled services because of illness, resignation, or other causes
beyond PSI's reasonable control, PSI will attempt to replace such personnel
immediately, but PSI shall not be liable for failure if it is unable to do so,
giving due regard to its other commitments and priorities.

     9.4  Reporting. Intershop will advise PSI of the individuals to whom PSI's
personnel will report progress on day-to-day work. Intershop and PSI shall
develop appropriate administrative procedures for the performance of work at
Intershop's site. Intershop shall, at the Intershop's option, periodically
prepare an evaluation of the work performed by PSI personnel for submission to
PSI.

     9.5  Expenses. Intershop shall be responsible for all travel and living
expenses incident to the performance of the services for the Intershop. These
expenses will be collected as incurred and invoiced to Intershop monthly.

     9.6  Ownership. All copyrights, patents, trade secrets, or other
intellectual property rights associated with any ideas, concepts, techniques,
inventions, processes or works of authorship developed or created by PSI or its
personnel prior to commencement of work hereunder or during the course of
performing Customer's work and all Work Product shall belong exclusively to PSI.
PSI hereby grants to Customer an unrestricted, irrevocable, non-exclusive,
perpetual, worldwide license to use for its internal business purposes the Work
Product within the scope of the services provided hereunder. Intershop will own
all extensions, modifications, and derivative works to the Software (subject to
PSI's underlying Software) developed by Intershop. PSI will not license ideas,
concepts, techniques, inventions, processes or works of authorship developed or
created by PSI or its personnel primarily for or on behalf Intershop to
competitors of Intershop without Intershop's prior

                                       6
<PAGE>

written consent.

10.  Confidentiality.

     10.1  Confidentiality. Each party shall maintain in confidence all
Confidential Information (as defined below) disclosed by the other party hereto.
The receiving party (the "Recipient") agrees that it shall not use, disclose or
grant use of such Confidential Information except as expressly authorized by the
disclosing party hereunder. Recipient hereby agrees to use at least the same
standard of care as it uses to protect its own confidential information of a
similar nature, but not less than a reasonable degree of care, to ensure that
its employees, agents or consultants do not disclose or make any unauthorized
use of such Confidential Information. Recipient shall promptly notify the
disclosing party (the "Discloser") upon discovery of any unauthorized use or
disclosure of Discloser's Confidential Information. "Confidential Information"
means any confidential or proprietary information, source code, plans or any
other information relating to any research project, work in process, future
development, scientific, engineering, manufacturing, marketing or business plan
or financial or personnel matter relating to Discloser, its present or future
products, sales, suppliers, customers, employees, investors or business,
identified by Discloser as Confidential Information, whether in oral, written,
graphic or electronic form. If disclosed in written, graphic or electronic form,
the information must be marked as confidential. If disclosed in oral form, such
Confidential Information must be reduced to writing and marked as Confidential
Information within thirty (30) days following disclosure. The parties agree that
the material financial terms of the Agreement will also be considered
Confidential Information of both parties.

     10.2  Exceptions. The obligations of confidentiality contained in Section
10.1 will not apply to Object Code if Intershop is a VAR, nor will the
obligations apply the extent that it can be established by Recipient by
competent, documented proof that such Confidential Information' (a) was already
known to Recipient, other than under an obligation of confidentiality, at the
time of disclosure by the Discloser; (b) was generally available to the public
or otherwise part of the public domain at the time of its disclosure to
Recipient; (c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
Recipient in breach of this Agreement; (d) was disclosed to Recipient, other
than under an obligation of confidentiality, by a third party who had no
obligation not to disclose such information to others; or (c) was developed
independently by Recipient without reference to or use of the Confidential
Information of Discloser.

     10.3  Return of Confidential Information. Each party shall promptly return
all Confidential Information it receives to the other party (i) after any
termination or expiration of this Agreement, or (ii) upon written notice from
the Discloser requesting return of such Confidential Information.

11.  Limited Warranties.

     11.1  Title. PSI warrants that it has the right to grant the licenses as
set forth in this Agreement, and that such licenses to the best of PSI's
knowledge do not infringe on any third parties' proprietary or personal rights.
PSI further warrants at the time of execution of this Agreement, PSI is unaware
of any pending or

                                       7
<PAGE>

threatened lawsuits concerning any aspect of the Software. If PSI becomes aware
of any pending or threatened lawsuit concerning any aspect of the Software, PSI
shall notify Intershop and provide Intershop with all information reasonably
related thereto.

     11.2  Year 2000. PSI represents and warrants that the Software as delivered
is Year 2000 Compliant. PSI agrees to provide Intershop with a copy of the
compliance testing results promptly upon request by Intershop. For purposes of
this section, "Year 2000 Compliant" means that the Software is designed to be
used prior to, during, and after calendar year 1999 and 2000 and that it will
operate during each such time period without error relating to date data, and
specifically including any errors relating to, or the product of, date data
which represents or references different centuries or more than one century.

     11.3  Services Warranty. PSI warrants that the Services, if any, will be
performed in a workmanlike and professional manner.

     11.4  Non-Infringement. Without limiting Intershop's rights under Section
12, should the Software become, or in PSI's opinion be likely to become, the
subject of any infringement claim or suit, PSI shall, at its option:

          A. procure for Intershop the right to continue distributing the
             Software, as well as the right for Intershop and its customers to
             continue use of the Software, while maintaining its functionality;
             or,

          B. modify the Software such that it no longer infringes the
             proprietary rights of any third party, while maintaining the
             functionality, look and feel of the Applications.

     If none of the foregoing is commercially reasonable and the use of the
Software is enjoined, PSI may terminate the license and refund monies paid and
Customer shall return the Software.

     11.5  Performance. PSI warrants that (a) the media on which the Software is
delivered will be free of defects in material and workmanship; (b) the Software
will function in accordance with the specifications for the Software in
applicable documentation; and (c) the Documentation shall be accurate in all
material respects. In the case of a breach of the warranties in this Section
11.5 (and in addition to any rights Intershop may have), PSI shall repair or
replace nonconforming, unsuitable or inaccurate Software or Documentation within
a reasonable period of time (not to exceed ten (10) days) of notice of such
condition.

     11.6  DISCLAIMER. THE WARRANTIES PROVIDED BY PSI HEREIN ARE THE ONLY
WARRANTIES PROVIDED BY PSI WITH RESPECT TO THE TECHNOLOGY AND DOCUMENTATION.
SUCH WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES BY PSI, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, WITH RESPECT TO THE TECHNOLOGY.

                                       8
<PAGE>

12.  INDEMNITY.

     12.1  Obligations of Each Party. Each party (the "Indemnifying Party")
will indemnify, defend and hold harmless the other party (the "Indemnified
Party") from all costs, damages, legal fees and settlement fees incurred by the
Indemnified Party arising from third party claims arising from the manufacture,
use, reproduction or distribution, as permitted under this Agreement, of any
content, technology or other information provided by Indemnifying Party to
Indemnified Party, including without limitation claims arising out of any
alleged infringement or misappropriation of any copyright, trademark, trade
secret, patent or other intellectual property right, or violation of any right
of privacy or publicity. For the indemnification obligations above to be
applicable, the Indemnified Party must (a) promptly notify the Indemnifying
Party in writing of any such claim and grant the Indemnifying Party sole control
of the defense and all related settlement negotiations, and (b) cooperate with
the Indemnifying Party, at the Indemnifying Party's expense, in defending or
settling such claim.

     12.2  Exclusions from Indemnification. Notwithstanding the foregoing, PSI
shall have no indemnity obligation under this Section 12 for any Claim relating
to: (i) modifications of the Software made by any entity other than PSI, if such
Claim would not have arisen or such infringement or misappropriation would not
have occurred but for such modifications, (ii) combination or use of the
Software with other products (including without limitation an Application) if
such Claim would not have arisen or such infringement or misappropriation would
not have occurred but for such combination or use, (iii) use of an outdated
version of the Software after PSI has made available an updated version which
does not infringe, or (vi) any functionality of the Software made at Intershop's
request, if such Claim would not have arisen or such infringement or
misappropriation would not have occurred but for such functionality.

     12.3  Entire Liability. The foregoing states PSI's entire liability, and
Intershop's sole and exclusive remedy with respect to any infringement or
misappropriation of any patent, copyrights, trademarks, trade secrets or other
intellectual property rights of any third party.

13.  LIMITATION OF LIABILITY. EXCEPT FOR BREACHES OF SECTIONS 2, 3 AND 10, EACH
PARTY AGREES THAT THE OTHER PARTY WILL NOT BE LIABLE FOR ANY LOSS OF USE,
INTERRUPTION OF BUSINESS, LOST PROFITS OR ANY INDIRECT, SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES OF ANY KIND REGARDLESS OF THE FORM OF ACTION WHETHER IN
CONTRACT, TORT (INCLUDING NEGLIGENCE), STRICT PRODUCT LIABILITY, OR OTHERWISE,
EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. IN
NO EVENT SHALL. EITHER PARTY'S LIABILITY TO THE OTHER PARTY EXCEED THE PAYMENTS
RECEIVED BY PSI FROM CUSTOMER WITHIN THE PRECEDING 12 MONTHS. THE PARTIES
ACKNOWLEDGE AND AGREE THAT THIS SECTION 13 IS AN ESSENTIAL ELEMENT OF THE
AGREEMENT AND THAT IN ITS ABSENCE, THE ECONOMIC TERMS OF THIS AGREEMENT WOULD BE
SUBSTANTIALLY DIFFERENT. THE LIMITATIONS IN THIS SECTION 13 SHALL NOT REDUCE THE
LIABILITY OF EITHER PARTY UNDER SECTION 12.

                                       9
<PAGE>

14.  Term and Termination.

     14.1  Term. This Agreement shall be effective as of the Effective Date and
shall continue in effect for until the Termination Date, unless terminated
earlier in accordance with this Section 14.

     14.2  Termination for Cause. Either party may terminate this Agreement if
the other party breaches a material term or condition of this Agreement and
fails to cure such breach following sixty (60) days written notice.

     14.3  Survival of Certain Terms. Sections 1 "Definitions", 3 "No Reverse
Engineering", 4 "Ownership", 5.2 "PowerTier and Object Deployment Fees and
Payments", 5.6 "Records and Audit", 10 "Confidentiality", 11.5 "No Other
Warranties", 13 "Limitation of Liability", 14.3 "Survival of Certain Terms" and
16 "General" shall survive any termination of this Agreement. Within thirty (30)
days after termination of this Agreement, Intershop shall make no further use of
and shall return to PSI, at Intershop's expense, any property, materials or
other items (including without limitation all PSI Confidential Information) of
PSI. If Intershop is a VAR, Each sublicense of PowerTier permitted hereunder
which is in effect as of the termination or expiration of this Agreement may
remain in effect under the same terms or others approved by PSI thereafter;
provided, that the relevant End User (i) is not in breach of the terms of such
sublicense, and (ii) shall thereafter owe all obligations pertaining to its
licensee of PowerTier directly to PSI.

     14.4  Other Remedies. Nothing contained herein shall limit any other
remedies that PSI may have for the default of Intershop under this Agreement nor
relieve Intershop of any of its obligations incurred prior to termination of
this Agreement.

15.  Marketing. PSI and Intershop agree that PSI may issue a press release at a
time selected by Intershop but in no event later than the date of first customer
shipment of the Application. Intershop shall have prior approval of press
release, but agrees not to unreasonably withhold that approval. PSI and
Intershop agree that they will hold discussions regarding the possibility of
engaging in mutually beneficial marketing activities which may include customer
success story, joint participation in media events from time to time, promotion
of PowerTier as a core technology embedded in Intershop and various co-branding
and co-marketing activities..

16.  General.

     16.1  Independent Contractors. The relationship of PSI and Intershop
established by this Agreement is that of independent contractors, and nothing
contained in this Agreement shall be construed to (i) give either party the
power to direct and control the day-to-day activities of the other, (ii)
constitute the parties as partners, joint venturers, co-owners or otherwise as
participants in a joint or common undertaking, or (iii) allow either party to
create or assume any obligation on behalf of the other party for any purpose
whatsoever.

     16.2 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed exclusively under the laws of the State of California as between
California residents and without reference to conflict of laws principles. The
United Nations Convention on the International Sale of Goods shall not apply to
this Agreement or the subject matter hereof. Both parties agree to submit to the
exclusive jurisdiction and venue of and agree that

                                      10
<PAGE>

any cause of action arising under this Agreement shall be brought in a court in
San Mateo County, California.

     16.3  Notices. Any notice required or permitted to be given under this
Agreement shall be delivered (i) by hand, (ii) by registered or certified mail,
postage prepaid, return receipt requested, to the address of the other party set
forth on the cover page hereto, or to such other address as a party may
designate by written notice in accordance with this Section 16.3, (iii) by
overnight courier, or (iv) by fax with confirming letter mailed under the
conditions described in (ii). Notice so given shall be deemed effective when
received, or if not received by reason of fault of the addressee, when
delivered.

     16.4  Nonassignability and Binding Effect. Intershop agrees that its rights
and obligations under this Agreement may not be transferred or assigned directly
or indirectly without the prior written consent of PSI. PSI may assign this
Agreement upon written notice to Intershop. Subject to the foregoing sentence,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their successors and assigns. Any assignments in violation of this
Section shall be null and void.

     16.5  Export Control. Since this Software is subject to the export control
laws of the United States, Intershop may not export or re-export the Software
without the appropriate United States and foreign government licenses. Intershop
shall otherwise comply with all applicable export control laws and shall defend,
indemnify and hold PSI and all PSI suppliers harmless from any claims arising
out of Intershop's violation of such export control laws. Intershop further
agrees to comply with the United States Foreign Corrupt Practices Act, as
amended.

     16.6  Restricted Rights Notices. The Software is a "commercial item," as
such term is defined at 48 C.F.R. (S) 2.101 (OCT 1995), consisting of
"commercial software" and, along with the documentation thereto, "commercial
computer software documentation" as such terms are used in 48 C.F.R. (S) 12.212
(SEPT 1995). Consistent with 48 C.F.R. (S) 12.212 and 48 C.F.R. (S)(S) 227.7202-
1 through 227.7202-4 (JUNE 1995), Intershop will provide PowerTier to U.S.
Government End Users (i) only as a commercial item and (ii) with only those
rights as are granted to all other End Users pursuant to the terms and
conditions herein. In the event that Intershop receives a request from any
agency of the U.S. Government to provide the Software and documentation thereto
with rights beyond those set forth above, Intershop will notify PSI of the scope
of rights requested and the agency making such request, and PSI may, in its sole
discretion, accept or reject such request.

     16.7  Severability. If any provision of this Agreement is found to be
invalid, unlawful or unenforceable by a court of competent jurisdiction, such
invalid term shall be severed from the remaining portion of this Agreement which
will continue to be valid and enforceable to the fullest extent permitted by
law.

     16.8  Force Majeure. Except for payment obligations, nonperformance of
either party shall be excused to the extent that performance is rendered
impossible by strike, fire, flood, governmental acts or orders or restrictions,
failure of suppliers, or any other reason where failure to perform is beyond the
reasonable control of the non-performing party.

     16.9  Entire Agreement. This Agreement including the Exhibits attached, the
Cover Page and, if applicable, the Addenda set forth the entire agreement and
understanding

                                      11
<PAGE>

of the parties relating to the subject matter of this Agreement and merge all
prior discussions between them. No modification of or amendment to this
Agreement, nor any waiver of any rights under this Agreement, shall be effective
unless in writing signed by the party to be charged. Additional or inconsistent
terms of any purchase order are expressly excluded and are hereby rejected.

                                      12
<PAGE>

Persistence Software License, Services, and Support Agreement       CONFIDENTIAL
--------------------------------------------------------------------------------

                                   EXHIBIT A

                     END USER MINIMUM TERMS AND CONDITIONS

                           END USER LICENSE AGREEMENT

This End User License Agreement ("Agreement") is made as of the date the sealed
media package containing this Agreement is opened (the "Effective Date") by and
between Persistence Software, Inc., with principal offices at 1720 S. Amphlett
Blvd., Suite 300, San Mateo, California, 94402 ("PSI") and the corporation or
individual opening the sealed media package ("Licensee"). BY OPENING THE SEALED
MEDIA PACKAGE, LICENSEE IS AGREEING TO BE BOUND BY THE TERMS OF THIS AGREEMENT
OR OTHER AGREEMENT SPECIFICALLY SIGNED BY LICENSEE AND AGREED TO IN WRITING BY
PSI. IF LICENSEE DOES NOT AGREE TO THE TERMS OF THIS AGREEMENT, LICENSEE SHOULD
RETURN THE UNOPENED MEDIA PACKAGE AND THE ACCOMPANYING ITEMS FOR A FULL REFUND.

1. Grant of License.
-------------------

The Persistence PowerTier software contained in the sealed media package
comprises the PowerTier Developer Toolkit (incorporating the PowerTier Builder,
DOCK and Link products), PowerTier server and ProActive Agents (collectively the
"Software"). The PowerTier Developer Toolkit is licensed for the number Of
developers specified on the invoice and/or license certificate issued by PSI.
Any individual who interfaces with the PowerTier Development Server, who uses
the PowerTier Builder, DOCK or Link products, who generates, modifies the files,
or debugs the objects generated by the PowerTier Builder is considered a
developer for licensing purposes. The PowerTier Server and ProActive Agent
software contained in the sealed media package is licensed for the development
and production application server(s) specified on the invoice and/or license
certificate issued by PSI. Each application server connected to the PowerTier
Server is considered a PowerTier Server for licensing purposes. For applications
which access multiple application servers, licenses must be purchased for all
such servers. Each concurrent user of an application deployed using the
PowerTier server(s) also needs a PowerTier user license. The total number of
concurrent users licensed to use the PowerTier server(s) is specified on the
invoice and/or license certificate issued by PSI. Licensee may make one (1)
object code copy of the Software solely for back-up purposes. Licensee may not
modify or translate the Software, merge any portion of the Software with any
other program, transfer, lease, sublicense, rent or resell the Software, or
remove any proprietary notices from the Software. Licensee shall not export or
re-export, directly or indirectly, the Software and Documentation, or any part
thereof, in a manner prohibited by the U.S. Export Administration Act or the
regulations thereunder.

2. Limited Warranty and Disclaimer.
----------------------------------

PSI warrants that, for a period of thirty (30) days from the date of delivery,
the Software will substantially achieve the functionality described in the
associated documentation provided by PSI (the "Documentation"). PSI also
warrants that the media on which the Software is furnished will be free from
defects in materials and workmanship for a period of thirty (30) days from the
date of delivery to Licensee. PSI's entire liability and Licensee's exclusive
remedy under this warranty will be - at PSI's option - to replace the media, to
correct the Software, or to refund the purchase price and terminate this
Agreement. PSI does not warrant that the Software will meet Licensee's
requirements or that the operation of the Software will be uninterrupted or
error free. EXCEPT FOR THE LIMITED WARRANTIES EXPRESSLY SET FORTH IN THIS
SECTION 2, PSI MAKES AND LICENSEE RECEIVES NO WARRANTIES OR CONDITIONS, EXPRESS
OR IMPLIED. PSI SPECIFICALLY DISCLAIMS ANY IMPLIED WARRANTIES OF
MERCHANTABILITY, NONINFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE.

                                       1
<PAGE>

                                   EXHIBIT A

                     END USER MINIMUM TERMS AND CONDITIONS

                                    Page 2

3. Limitation of Liability.
--------------------------

IN NO EVENT WILL PSI BE HELD LIABLE FOR ANY SPECIAL, INDIRECT OR CONSEQUENTIAL
DAMAGES, INCLUDING DAMAGES FOR LOSS OF DATA, LOST OPPORTUNITY OR LOST PROFITS.
THIS LIMITATION WILL APPLY EVEN IF PSI HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE. LICENSEE ACKNOWLEDGES THAT THE LICENSE FEE REFLECTS THIS ALLOCATION
OF RISK.

4. Ownership and Rights.
-----------------------

This license is not a sale. Title and copyrights to the Software and
Documentation remain with PSI, and PSI reserves all rights not expressly granted
to Licensee herein. This license may not be assigned or transferred without the
prior written consent of PSI. Licensee acknowledges that the Software source
code remains a confidential trade secret of PSI and therefore agrees not to
attempt to decipher, reverse engineer or decompile the Software, or otherwise
attempt to gain access to the source code for the Software. Licensee also agrees
not to develop passwords or codes to enable use by unauthorized users.

5. Term and Termination.
-----------------------

This Agreement will begin on the Effective Date and will remain in effect until
terminated as set forth in this Section 5. This Agreement will automatically
terminate in the event that Licensee breaches any of its terms. In particular,
unauthorized copying, or use by more than the authorized number of users of the
Software, will result in automatic termination of this Agreement. Licensee may
also terminate the license at any time by providing written notice and
certification that all copies of the Software and Documentation have been
destroyed. On any termination, all use of the Software and Documentation must
stop.

6. U.S. Government Restricted Rights.
------------------------------------

The Software and Documentation are considered to be "commercial computer
software" and "commercial computer software documentation", respectively,
pursuant to DFAR Section 227.7202 and FAR Section 12.212, as applicable. Use,
duplication or disclosure of the Software and/or Documentation by the U.S.
Government is subject to the restrictions set forth in DFAR Section 227.7202 for
military agencies, and FAR Section 12.212 for civilian agencies. PSI reserves
all rights not expressly granted herein. The contractor/manufacturer is
Persistence Software, Inc., 1720 S. Amphlett Blvd., Suite 300, San Mateo,
California 94402.

7. Governing Law.
----------------

This agreement will be governed by the laws of the State of California, without
reference to conflict of laws principles.

8. General.
-----------

This Agreement constitutes the entire agreement between Licensee and PSI and
supersedes any prior agreement concerning the Software and Documentation. PSI is
not bound by any provision of any purchase order, receipt, acceptance,
confirmation, correspondence, or otherwise, unless PSI specifically agrees to
the provision in writing.

                                       2
<PAGE>

                                   EXHIBIT B

                     PSI TRADEMARKS, TRADE NAMES AND LOGOS

                           Persistence Software, Inc.
                     U.S. Federal Taxpayer I.D. 94-3138935
         Incorporated in California May 31, 1991 as Fulcrum Innovations
                 Name change to Persistence Software, Inc. 1992

                                  Tradenames:
                                  -----------
                           Persistence Software, Inc.
                           Persistence Software, Ltd.

              Registered Trademarks, Service Marks, & Copyrights:
              ---------------------------------------------------
                                  Persistence
                           Persistence Software, Inc.
                                   Trans App
                               Live Object Cache
                           Persistence Object Builder
                           Persistence Object Server
                               Pro Active Agents
                                   PowerTier
                                   Power Tier
                                Powertier Server
                                  Acceleratier
                                  Appcelerator

                                     Logos
                                     -----
            A) "Power Your Performance"

            B) "Powered b[LOGO]werTier"
          As above, but with [LOGO]rsistence Powertier" wording
                          rather [LOGO]ur Performance"

            C) "Persistence"
                      [LOGO]

REQUIRED USAGE: Further to clause 2.1.4 of the Agreement, VAR is required to
display the "Powered by Persistence PowerTier" Logo on all packaging for the
Application(s) and as part of the start-up routine when the Application(s) are
executed, such logo to be no less than 3cm diameter wherever used.

                                       3
<PAGE>

                                   EXHIBIT C
                       Maintenance and Technical Support

1. SUPPORT

     1.1 PSI Back-End Support. During the term of this Agreement, and for a
period of one (1) year thereafter PSI shall provide to Intershop back-end
support services, consistent with the support obligations described on Exhibit
C-1 hereto (which Exhibit may be supplemented or replaced, from time to time, by
mutual agreement), with respect to the Applications including, without
limitation, identification of defective Software source and object code and
providing corrections, workarounds and/or patches to correct defects or errors
in such source or object code.

     2.2 Technical Support of Intershop. During the term of this Agreement, and
for a period of one (1) year thereafter, in addition to the back-end support
services described above, PSI shall provide to Intershop the following technical
support services:

          A. PSI shall appoint a technical contact to whom Intershop may address
all technical questions relating to PSI technologies. Upon execution of this
Agreement, the parties shall determine a mutually agreeable procedure by which
Intershop shall direct its technical questions to the appropriate PSI technical
contact.

          B. PSI shall promptly answer all technical questions asked by
Intershop relative to the Software.

     2.3 Training of Intershop. [To be determined.]

     2.4 Upgrades, Updates, Ports, Error Corrections and Enhancements. PSI will
include Intershop in its alpha and beta programs for any upgrades, updates or
ports to additional platforms to the Software released during the term of this
Agreement, and will provide Intershop with the production version of such
upgrades, updates or ports simultaneously with its earliest release of such
upgrades, updates or ports to other customers. PSI shall also provide Intershop
during the term hereof with any error corrections, bug fixes and enhancements to
the Software simultaneously with its earliest release of such error corrections,
bug fixes or enhancements to other customers. Intershop may, but is not required
to, incorporate any such upgrade, update, port, error correction, bug fix or
enhancement in a Application or Applications.

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                         Exhibit C - Continued [LOGO]

PowerTier/EJB Product Commitments for Intershop
-----------------------------------------------

Persistence undertakes to enhance its PowerTier/EJB product for Intershop as
detailed below.

Where it is stated that an enhancement will be "in the Orca release" this means
that the enhancement will be delivered as part of the PowerTier/EJB version
which is code-named "Orca", and which is scheduled to be available as a beta
version on December 4/th /1998.

Where it is stated that an enhancement will be "in the Stingray release" this
means that the enhancement will be delivered as part of the PowerTier/EJB
version which is code-named "Stingray", and which is scheduled to be available
as a beta version at the end of January 1999, with additional beta releases at
the end of February and the end of March 1999.

The enhancements are classified under 2 headings:-

 .  Acceptance Criteria": these are the features that must be in the Stingray
   release in order for PowerTier/EJB to be accepted by Intershop, which in turn
   will enable Persistence to invoice Intershop for the second agreed pre-
   payment.
 .  "Required"' these are enhancements that Persistence must provide to
   Intershop, although it is acceptable for them to be made available after the
   Stingray release.

ACCEPTANCE CRITERIA
1. Unicode Support

     A mechanism will be put into PowerTier/EJB that automatically translates
     Unicode in the Java application layer into UTF8-encoded data for storing in
     the database. This mechanism will be completely transparent to the
     developer.

     When: by end of February 1999.

2. Cache Clearing

     The problem whereby EJB Beans are not cleared from the PowerTier/EJB Server
     will be fixed by the end Of February 1999.

     When: by end of February 1999.

3. Optimistic Failure Handling

     A mechanism will be provided whereby PowerTier/EJB can enable an
     application to automatically recover optimistic lock failures so that the
     object(s),that caused an optimistic lock failure can be automatically
     refreshed from the database.

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     When: By the end of February 1999.

4. Solving Java Server Toolkit Integration Problem

     This has already been achieved.

     When: closed.

5. Controlling the Visibility of Beans over the Network

     Currently all EJB Beans register with RMI, which means they are all
     'visible' to any user on the network. This is an unacceptable security
     exposure. Persistence will enhance PowerTier/EJB to: a) replace RMI
     registration with JNDI registration; and b) allow you to specify in the EJB
     Deployment Descriptor whether or not an EJB Bean is to register with JNI.
     Consequently, you will be able to completely control which beans are
     'visible' over the network and which are 'hidden'.

     When: In the Stingray release.

6. Reflection-Based Generation for Session Beans

     Reflection-based-generation will enable Java Classes that you have already
     written to be automatically transformed into EJB Session Beans.

     When: In the Orca release.

7. Reflection-Based Generation for Entity Beans

     Reflection-based-generation will enable custom methods that you have
     written to be automatically incorporated into EJB Entity Beans along with
     the methods generated by the PowerTier/EJB toolset.

     When: In the Orca release.

8. EJB Lifecycle Hook Methods

     These will be provided in the Orca release.

     When: In the Orca release.

9. Support for Java Packages

     Packages will be supported in the PowerTier Server as part of the Orca
     release.

     When: In the Orca release

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10. "Lazy-Fetch"

      PowerTier/EJB will be enhanced to provide a "Lazy Fetch" mechanism, which
      provides is a cursor-like access for the results of find XXX()-methods.

      When: In the Stingray release

11. Additional 'Find' Mechanism

      A "multi-class fetch" mechanism will be provided that enables queries to
      include 'joins'.

      When: In the 'Stingray' release.

12. Oracle 8 Client Library Support

      This will be provided in the Orca release.

      When: In the Orca release.

REQUIRED
13. Cache Synchronisation

      PowerTier will be enhanced to provide a mechanism that, in conjunction
      with a communications protocol, enables the same EJB Entity Beans
      contained in separate PowerTier Servers to be kept synchronised.

      When: In the Stingray release.

14. 2-phase commit across multiple databases from a single application server

      PowerTier/EJB will be enhanced to enable the co-ordination of 2-phase
      commits across multiple database from a single PowerTier/EJB application
      server.

      When: In the Stingray release.

15. Native Unicode Support

      In PowerTier native Unicode will be included as UCS2 in the
      Java/application Layer. This is a long term requirement.

      When: In a later release after Stingray.

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                                  EXHIBIT C-1
                              Support Obligations

                     Persistence Technical Support Policies
                                    (Europe)

Overview

Persistence Technical Support enables you to make the most out of your software
investment by providing timely, courteous and knowledgeable support. We have
designed a Technical Support Centre to co-ordinate much of your day-to-day
interaction with Persistence Software.

These policies and procedures are the basis of our customer support commitment.
They describe in detail our support services and the procedures for you to
follow when using Technical Support. By defining clear guidelines, we aim to
simplify communications, with the goal of resolving your product questions and
problems as quickly as possible. This document also describes our policies for
the duration of support for old releases and for building patches to supported
releases.

Persistence Technical Support Centre

European customer technical support calls are handled by a local support centre
based in London. This support centre liases directly with European customers and
the Central Customer Support Centre based at our headquarters in North America.

Contacting Technical Support

You must have a valid maintenance contract in effect to use the Technical
Support Centre. Please include your maintenance contract number when you contact
the Technical Support Centre and indicate that you are based in Europe. You may
contact our Technical Support Centre by phone, email or completing the form in
the Tech Support area of the web site, using the following contact information:

Telephone: +44 171 588 4344

Email:     support@persistence.com
           ------------------------

Web Site:  www.persistence.com
           -------------------

Tracking System

All Cases and errors are tracked through an automated problem resolution system.
This is the central repository for all information about your technical contacts
with us.

Our on-line system allows us to:

[_]  Track all of our interactions with you

[_]  Track all of our efforts on your behalf as we resolve your issues

[_]  Keep detailed information on the problems you report and the questions you
     ask

[_]  Search for problem resolutions that have been documented in our Frequently
     Asked Questions (FAQ) database.

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[_]  Maintain a customer profile on your primary and alternate technical
     contacts

[_]  Communicate case status and escalate the most important cases to senior
     Persistence engineers.

Other Sources of Information

The Technical Support Centre is also a valuable source of information. The
Support Centre will provide information on Persistence products including:

[_]  Frequently asked questions

[_]  Knowledge Base

[_]  Online User/Reference Manual

[_]  Known bugs

[_]  Release notes

Support Centre Procedures

Persistence Technical Support handles your requests using a prioritisation
process for resolving the most critical problems quickly. A Technical Support
Engineer opens your case, verifies your support contract, and records the
preliminary information. The Engineer will then give you a Case ID that you can
use for your future reference. All information related to the case is tracked
using this Case ID. Through experience or reference material the Engineer may
resolve your case during the initial contact. If this is not possible, the
Engineer may ask you to send further information, and may involve other
engineers to consult on the case.

3.1 Customer Contacts

To maintain consistent communications with you, we allow one primary and two
alternate technical contacts per development project. You assign these
individuals and are the only ones authorised to contact the Persistence Support
Centre. To change your contacts, please ask technical support for Contact Change
Request Form (CCRF). If an individual who is not on the contact list calls, we
will ask that they first call one of the assigned contacts, who will in turn
contact us.

In the case of an evaluation, we allow one client contact per evaluation. This
is the person named in the Evaluation Request Form (ERF).

3.2 Required Information

To speed handling of technical support issues, it is more efficient if you
prepare some information beforehand. The checklist below presents information
that is required before any problem resolution can begin.

[_]  Company name and contact information

[_]  Persistence Product

[_]  Persistence Product version number

[_]  Hardware platform and operating system

[_]  Database vendor and version number

[_]  Compiler vendor and version number

[_]  ORB vendor and version number (if appropriate)

[_]  Statement of the problem or question. This may also include code-fragments

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3.3  Opening a Call

All customer queries are initially recorded in our tracking system as a Call. A
Call does not have a priority associated with it. Technical Support Centre's
objective is to close all open calls as soon as possible. A call will be closed
after answering the customer's questions/queries or by escalating Calls to
Problems or Enhancement requests (see section 3.4 Opening a Problem).

3.4  Opening a Problem

A Call will be escalated to Problem status after the Technical Support Centre
has verified the problem with a supported Persistence product. The Technical
Support Centre must have your minimal test case (see section 3.5 Minimal Test
Case Information) to do this. Once a Problem is opened, the Technical Support
Centre will assign a priority based on the prioritisation criteria documented in
section 3.6 Case Priority Levels.

3.5  Minimal Test Case Information

In order for work to begin on your problem, Persistence must be able to
reproduce the condition in our own environment. In some situations, it may be
possible to reproduce your problem based on your description alone. In other
cases, we will require a minimal test case from you before we can begin work.

The minimal test case represents the minimum application required to reproduce
the problem:

---------------
Object Model     Your persist file with a maximum of 5 classes
---------------

---------------
Test case code   main.cpp program with no more than 50 lines which reproduces
---------------  your problem

---------------
Makefile         A simple Makefile to build your test case
---------------

---------------
Modified         If your problem involves methods added to Persistence
Generated Code   generated code, include the relevant modified generated files
---------------

---------------
Client           If your problem involves a three-tier architecture, be sure
---------------  to include simplified client files

                          Figure 1 - Minimal test case

Until we receive the necessary information to duplicate the reported problem in
our Technical Support Centre, work cannot begin on problem resolution. In
addition, cases which contain more than five classes or which involve
significant amounts of code not related to the problem may be placed at a lower
priority for resolution.

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Once a minimal test case has been received by the Technical Support Centre and
reproduced by the Technical Support Engineer, the Case ID will be assigned a
priority (i.e. P1, P2, P3, and P4), which will determine when resources are
assigned to fix the problem.

3.6    Case Priority Levels

Persistence prioritises your case based on its severity. Cases with severity
levels of P1, P2, or P3 are automatically escalated to more senior engineering
resources if they are not resolved within the specified time period (See Table 1
- Problem resolution goals). In order for cases to be prioritised, they must be
submitted along with a minimal test case.

The following diagram illustrates the decision tree for determining case
priorities:

                                              --Yes-- P1 Priority

                                          Stop Work
                              --No--    on production        --Yes-- P2 Priority
                                           system?
-----------------
     Customer                                             Stops work
   problem with  --  Work-around              --No--    on development
minimal test case     available?                            system?
-----------------

                              --Yes--   P4 Priority           --No-- P3 Priority

                           Figure 2 - Priority levels

3.6.1  Case Priority P1
-----  ----------------

When you have an emergency in a production system that stops work, the Technical
Support Centre prioritises your case as P1. 'Stops work' means that production
work has halted and cannot continue. This priority allows us to immediately
direct your case to the Engineer with the correct expertise. When the
appropriate Engineer is not immediately available, our goal is to have contacted
you to begin problem resolution within one hour after we have received a minimal
test case.

P1 cases without resolution or work-around within one day of receiving a test
case are immediately escalated to a Senior Engineer and management.

3.6.2  Case Priority P2
-----  ----------------

When you have a condition in a development system that stops work, the Technical
Support Centre prioritises your case as P2. 'Stops work' means that further
development work has halted and cannot continue. This priority allows us to
immediately direct your case to the Engineer with the correct expertise. When
the appropriate Engineer is not immediately available, our goal is to have
contacted you to begin problem resolution within two hours after we have
received a minimal test case.

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P2 cases without resolution or work-around within two days of receiving a test
case are escalated to a Senior Engineer and management.

Note: During P1 and P2 problem resolution there will be ongoing communication
providing status and information exchange to facilitate resolution of the
problem.

3.6.3 Case Priority P3
----------------------

When you have a condition in a development or production system that does not
prohibit progress, for which there is no work-around, the Technical Support
Centre, prioritises your case as P3. A 'work-around' is a known solution to
resolve the condition. This priority--allows us to devote resources to
identifying a work-around. Our goal is to have contacted you to begin problem
resolution within four hours after we have received a minimal test case.

P3 cases without resolution or work-around within 1 week of receiving a test
case are escalated to a Senior Engineer and management.

3.6.4 Case Priority P4
----------------------

When you encounter a known condition in a development or production system for
which there is a robust work-around, the Technical Support Centre prioritises
your case as P4. Our goal is to have contacted you regarding this issue within
one day. This condition will be addressed in a scheduled release of Persistence.

The following table summarises the response goals of the Technical Support
Centre. Note that in all cases, a minimal test case is required.

-------------------------------------------------------------------------------
Case priority                    Initial           Respond with Work-around or
                                 contact within    commitment within
-------------------------------------------------------------------------------
P1 - stops production            1 hour            2 working days

P2 - stops development           2 hours           3 working days

P3 - no work-around              4 hours           1 week

P4 - work-around exists          1 day             N/A

                       Table 1 - Problem resolution goals

3.7 Patches to Resolve Problems

Once the Technical Support Centre has verified a problem your Case ID will be
given a priority. When requested, Persistence will endeavour to provide patches
to P1, P2, and P3 priority problems on supported versions of Persistence
products (see section 0, 'Duration of Support for Releases'). In some cases,
patches may not be possible and you will be required to upgrade to a more recent
version of the product.

For P1 and P2 problems Persistence will create, build, and test a patch as
quickly as possible, usually within 3 days of problem verification. P3 problems
will be resolved in a subsequent product release. P4 problems may be resolved in
conjunction with other product enhancements.

The table below summarises the goals for the delivering patches. The time
periods begin when the Technical Support Centre has verified the problem:

--------------------------------------------------------------------
Case priority                          Goal for delivering patch
--------------------------------------------------------------------

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P1 - stops production    within 3 working days

P2 - stops development   within 4 working days

P3 - no work-around      in subsequent release

P4 - work-around exists  as part of other enhancement

Table 2 - Patch delivery goals

3.8 Escalation to a Manager

Whenever the Persistence Technical Support Centre is not meeting your needs or
expectations, you may escalate the case or any other issue to the Technical
Support Centre Manager. You may also contact the Technical Support Centre
Manager if the case becomes too complex or you become concerned that our
Engineers are not able to resolve the case in a suitable manner.

3.9 Requesting an Enhancement

Each enhancement request will be assigned a Case ID. This will allow us to track
your request and to inform you when the enhancement is available.

Duration of Support for Releases

The Persistence Technical Support Centre will provide responses (as described
above) for supported releases. The duration of support will vary depending on
the type of release. Persistence defines three types of releases:

General Availability (GA)

A GA release will be sent to all customers who have current support contracts.

A GA release will be supported for the longer of:

[_]  18 months

[_]  One year after the next GA release.
Beta

Beta releases will be sent to customers who have been selected to participate in
the beta program.

Beta releases will not be supported beyond the shipment of the next GA, or Beta
release. Therefore, Persistence recommends that Beta releases be not used for
shipment of production systems.

Alpha

Alpha releases are sent in rare situations to satisfy urgent customer needs.

Alpha releases will not be supported beyond the shipment of the next GA, Beta,
or Alpha release. Therefore, Persistence recommends that Alpha releases be not
used for shipment of production systems.

Support for New Versions of Operating Systems, Databases, Compilers, ORBs, and
Class Libraries

Persistence intends to provide one or two GA releases per year. Persistence
attempts to support any configuration that is commercially available (i.e. not
in Beta) 60 days prior to the scheduled GA

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release of Persistence Products. Persistence will support the important new
features of the new operating system, database, compiler, ORB, and/or class
library as they may apply to various Persistence products.

Support for Old Versions of Operating Systems, Databases, Compilers, ORBs, and
Class Libraries

Persistence products interact with and depend on operating systems, databases,
compilers, ORBs, and/or class libraries. As new versions of the products are
available, Persistence will discontinue support for old version of these
products. This section describes the policy for terminating our support of a
particular release of an operating system, database, compiler, ORB and/or class
library.

Operating Systems

New releases of Persistence products will continue to support an old version of
an operating system for one year after a GA release of Persistence product is
available that supports the new version of the operating system.

Databases

New releases of Persistence products will continue to support an old version of
a database for one year after a GA release of Persistence product is available
that supports the new version of the database.

Compilers

New releases of Persistence products will continue to support an old version of
a compiler for six months after a GA release of Persistence product is available
that supports the new version of the compiler.

ORBs

New releases of Persistence products will continue to support an old version of
a ORB for six months after a GA release of Persistence product is available that
supports the new version of the ORB.

Class Libraries

New releases of Persistence products will continue to support an old version of
a class library for six months after a GA release of Persistence product is
available that supports the new version of the class library.

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                                   Exhibit D

                Terms to be agreed upon subsequent to signing of
                                   Agreement

                                      15

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