PERVASIVE SOFTWARE INC

On January 28, 2013, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Actian Corporation, a Delaware corporation (“Actian”), and Actian Sub II, Inc., a Delaware corporation and a wholly owned subsidiary of Actian (“Merger Sub”). Pursuant to the terms of the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), and the Company shall continue as the surviving corporation of the Merger and as a wholly owned subsidiary of Actian.

Pursuant to the terms of the Merger Agreement and subject to the conditions thereof, at the effective time of the Merger (the “Effective Time”), each share of common stock of the Company (the “Common Stock”) issued and outstanding immediately prior to the Effective Time (other than shares owned by the Company or Actian or any subsidiary thereof) will be cancelled and extinguished and automatically converted into the right to receive $9.20 in cash; each option to purchase Common Stock outstanding immediately prior to the Effective Time (whether vested or unvested) shall be cancelled and converted into, and shall become a right to receive, an amount in cash equal to the product of (a) the excess, if any, of $9.20 less the exercise price per share attributable to such option and (b) the number of shares of Common Stock issuable upon exercise in full of such option; and each restricted stock unit outstanding immediately prior to the Effective Time shall be cancelled and converted into, and shall become a right to receive, an amount in cash equal to the product of (x) $9.20 and (y) the number of shares of Common Stock issuable upon settlement in full of the restricted stock unit, in each case without interest and subject to any applicable withholding of taxes.

The Merger Agreement contains certain termination rights for both the Company and Actian, including upon the failure by Actian to obtain the required debt financing for the transaction. The Merger Agreement provides that, upon termination under specified circumstances, the Company would be required to pay Actian a termination fee of approximately $4.9 million, and upon termination under specified circumstances, Actian would be required to pay the Company a termination fee of $10.0 million.

The Board of Directors of the Company has approved the Merger and the Merger Agreement. Shea & Company, LLC (“Shea”) has served as financial advisor to the Board of Directors. On January 27, 2013, Shea delivered a written opinion to the Board of Directors that, as of the date of the Merger Agreement (subject to the assumptions, qualifications, limitations and other matters set forth therein), the merger consideration is fair to the holders of the Common Stock of the Company from a financial point of view.

Our revenues were $12.5 million in the three months ended December 31, 2012, representing a 5% increase over $11.9 million for the comparable period in the prior fiscal year. Our revenues for the six-month period ending December 31, 2012 increased by 7% to $25.2 million as compared to $23.6 million for the comparable period in the prior fiscal year. Our product license revenues were $7.8 million in the three months ended December 31, 2012, an increase of 8% over $7.2 million for the comparable period in the prior fiscal year. Our product license revenues for the six-month period ending December 31, 2012 were $16.2 million, an increase of 9% over $14.8 million for the comparable period in the prior fiscal year. Our service and other revenues were $4.7 million in the three months ended December 31, 2012, consistent with the $4.7 million for the comparable period in the prior fiscal year. Our service and other revenues for the six-month period ending December 31, 2012 were $9.0 million, an increase of 2% over $8.8 million for the comparable period in the prior fiscal year.

There are risks and uncertainties associated with our proposed acquisition by Actian. For example, the acquisition may not be consummated, or may not be consummated as currently anticipated, as a result of several factors, including but not limited to the failure to satisfy the closing conditions set forth in the Merger Agreement, such as the conditions that we obtain the approval of the stockholders holding a majority of the outstanding Common Stock of the Company and that we receive antitrust approvals. The Merger Agreement provides that, upon termination under specified circumstances, the Company would be required to pay Actian a termination fee of approximately $4.9 million.