Exhibit 2
Parent Stock Option Agreement
This Stock Option Agreement (the "Agreement") is made and entered into as
of April 9, 2001, between Kana Communications, Inc., a Delaware corporation
("Parent"), and Broadbase Software, Inc., a Delaware corporation ("Company").
Recitals
A. Concurrently with the execution and delivery of this Agreement, Parent,
Company and Arrow Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), are entering into an Agreement and
Plan of Merger (the "Merger Agreement"), that provides, among other things, upon
the terms and subject to the conditions thereof, for the merger of Merger Sub
and Company (the "Merger"). Capitalized terms used in this Agreement but not
defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.
B. As a condition to Company's willingness to enter into the Merger
Agreement, Company has required that the Parent agree, and the Parent has
agreed, to grant to Company an option to acquire shares of Parent Common Stock
("Parent Shares"), upon the terms and subject to the conditions set forth
herein.
In consideration of the foregoing and of the mutual covenants and
agreements set forth herein and in the Merger Agreement and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
1. Grant of Option. Parent hereby grants to Company an irrevocable option
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(the "Option"), exercisable following the occurrence of an Exercise Event (as
defined in Section 2(a)), to acquire up to a number of Parent Shares equal to
19.9% of the Parent Shares issued and outstanding as of the date, if any, upon
which an Exercise Notice (as defined in Section 2(b) below) shall have been
delivered (the "Option Shares"), in the manner set forth below by paying cash at
a price of $.875 per share (the "Exercise Price"); provided, however, that the
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Exercise Price will automatically, equitably and proportionally be adjusted to
reflect any subdivision, stock split, combination, reverse stock split, stock
dividend or other recapitalization affecting Parent Shares; and provided,
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further, that the number of Parent Shares issuable hereunder shall be subject to
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adjustment such that in no event shall the total number of Parent Shares
issuable upon exercise of the Option exceed that number of shares which is equal
to the difference of 19.9% of the Parent Shares issued and outstanding as of the
date, if any, upon which an Exercise Notice shall have been delivered less the
total number of Parent Shares, if any, issued or issuable at or prior to the
time of such exercise upon conversion of that certain Convertible Promissory
Note pursuant to that certain Revolving Loan Agreement dated the date hereof
between Parent and Company. All references in this Agreement to Parent Shares
issued to Company hereunder shall be deemed to include any associated Rights.
2. Exercise of Option; Maximum Proceeds.
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(a) For all purposes of this Agreement, an "Exercise Event" shall mean
the occurrence of any of (i) a Parent Triggering Event (as such term is defined
in the Merger Agreement), (ii) (A) the public announcement of an acquisition or
purchase by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 30%
beneficial ownership interest in the total outstanding voting securities of
Parent or any of its subsidiaries; or (B) the public announcement or
commencement of any tender offer or exchange offer that if consummated would
result in any person or "group" beneficially owning 30% or more of the total
outstanding voting securities of Parent or any of its subsidiaries.
(b) At any time following the occurrence of an Exercise Event, Company
may deliver to the Parent a written notice (an "Exercise Notice") specifying
that it wishes to exercise its rights to acquire Parent Shares under the Option
and close a purchase of Option Shares and specifying the total number of Option
Shares it wishes to acquire. Unless such Exercise Notice is withdrawn by
Company, the closing of a purchase of such Option Shares (a "Closing") shall
take place at the principal offices of Parent upon such date (which shall be no
earlier than three business days following the delivery of the Exercise Notice)
and at such time prior to the termination of the Option as may be designated by
Company in the Exercise Notice.
(c) The Option shall terminate upon the earliest to occur of (i) the
Effective Time (as such term is defined in the Merger Agreement), (ii)
termination of the Merger Agreement pursuant to Section 7.1(a) thereof, (iii)
termination of the Merger Agreement pursuant to Section 7.1(i) thereof if prior
to such termination no Triggering Event shall have occurred; (iv) termination of
the Merger Agreement pursuant to Section 7.1(b), 7.1(c), 7.1(d) or 7.1(e)
thereof if prior to such termination no Exercise Event shall have occurred or
(v) 12 months following the termination of the Merger Agreement under any other
circumstances; provided, however, that if the Option is exercisable but cannot
be exercised by reason of any applicable government order or because the waiting
period related to the issuance of the Option Shares under the HSR Act shall not
have expired or been terminated, or because any other condition to closing has
not been satisfied, then the Option shall not terminate until the tenth business
day after all such impediments to exercise shall have been removed or shall have
become final and not subject to appeal, and provided, further that if,
subsequent to exercise of the Option, but prior to any other termination of the
Merger Agreement, the Merger Agreement is terminated by Parent pursuant to
Section 7.1(i) thereof, then (1) the Option, to the extent it has not been
exercised, shall terminate and (2) to the extent the Option has been exercised,
Parent may repurchase for cash all Option Shares then held by Company at a per
Option Share price equal to the Exercise Price.
(d) If the sum of (i) any Termination Fee received by Company under
Section 7.3(c) of the Merger Agreement plus (ii) the proceeds received by
Company from any sales or other dispositions of Option Shares (including
pursuant to Parent's exercise of its rights to
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purchase Option Shares under Section 7(a) and Section 10 hereof) or the Option
(including pursuant to Company's exercise of its rights to surrender the Option
pursuant to Section 9 hereof), plus (iii) any dividends or distributions
received by Company declared on Option Shares is, in the aggregate, greater than
the sum of (x) $2,500,000 plus (y) the product of (1) the Exercise Price
multiplied by (2) the number of Parent Shares purchased by Company pursuant to
the Option (the sum of clauses (x) and (y), the "Profit Cap"), then all such
proceeds received by Company in excess of the Profit Cap shall be promptly
remitted in cash by Company to Parent.
3. Conditions to Closing. The obligation of Parent to issue Option Shares
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to Company hereunder is subject to the conditions that (a) any waiting period
under the HSR Act applicable to the issuance of the Option Shares hereunder
shall have expired or been terminated; (b) all material consents, approvals,
orders or authorizations of, or registrations, declarations or filings with, any
Governmental Entity, if any, required in connection with the issuance of the
Option Shares hereunder shall have been obtained or made, as the case may be;
and (c) no preliminary or permanent injunction or other order by any court of
competent jurisdiction prohibiting or otherwise restraining such issuance shall
be in effect. It is understood and agreed that at any time during which Company
shall be entitled to deliver to Parent an Exercise Notice, the parties will use
their respective reasonable efforts to satisfy all conditions to Closing, so
that a Closing may take place as promptly as practicable.
4. Closing. At any Closing, (a) Parent shall deliver to Company a single
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certificate in definitive form representing the number of Parent Shares
designated by Company in its Exercise Notice consistent with this Agreement,
such certificate to be registered in the name of Company and to bear the legend
set forth in Section 10 hereof, against delivery of (b) payment by Company to
the Parent of the aggregate Exercise Price for the Parent Shares so designated
and being purchased by delivery of a certified check, bank check or wire
transfer of immediately available funds.
5. Representations and Warranties of the Parent. Parent represents and
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warrants to Company that (a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder; (b) the execution and delivery of this Agreement by
Parent and consummation by Parent of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
no other corporate proceedings on the part of Parent are necessary to authorize
this Agreement or any of the transactions contemplated hereby; (c) this
Agreement has been duly executed and delivered by Parent and constitutes a
legal, valid and binding obligation of Parent and, assuming this Agreement has
been duly executed and delivered by Company, is enforceable against Parent in
accordance with its terms, except as enforceability may be limited by bankruptcy
and other similar laws affecting the rights of creditors generally and general
principles of equity; (d) except for any filings, authorizations, approvals or
orders required under the applicable blue sky laws of any state, and the rules
and regulations promulgated thereunder, Parent has taken all necessary corporate
and other action to authorize and reserve for issuance and to permit it to issue
upon
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exercise of the Option, and at all times from the date hereof until the
termination of the Option will have reserved for issuance, a sufficient number
of unissued Parent Shares for Company to exercise the Option in full and will
take all necessary corporate or other action to authorize and reserve for
issuance all additional Parent Shares or other securities which may be issuable
pursuant to Section 8(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement and payment
therefor by Company, will be validly issued, fully paid and nonassessable; (e)
upon delivery of the Parent Shares and any other securities to Company upon
exercise of the Option, Company will acquire such Parent Shares or other
securities free and clear of all Encumbrances, excluding those imposed by
Company; (f) the execution and delivery of this Agreement by Parent do not, and
the performance of this Agreement by Parent will not, (i) violate the
Certificate of Incorporation or Bylaws of the Parent, (ii) conflict with or
violate any order applicable to the Parent or any of its subsidiaries or by
which they or any of their material property is bound or affected or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a material Encumbrance on any material property or assets of
Parent or any of its subsidiaries pursuant to, any material contract or
agreement to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or any of their material property is bound or
affected, except to the extent that any such breach, default, right of
termination, amendment, acceleration or cancellation or creation of a material
Encumbrance would not prevent or materially delay the performance by Parent of
Parent's obligations under this Agreement; and (g) the execution and delivery of
this Agreement by Parent does not, and the performance of this Agreement by
Parent will not, require any consent, approval, authorization or permit of, or
filing with, or notification to, any Governmental Entity.
6. Representations and Warranties of Company. Company represents and
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warrants to Parent that (i) the execution and delivery of this Agreement by
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Company
and this Agreement has been duly executed and delivered by a duly authorized
officer of Company and will constitute a legal, valid and binding obligation of
Company and, assuming this Agreement has been duly executed and delivered by
Company, is enforceable against Parent in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting the
rights of creditors generally and general principles of equity; and (ii) Company
is acquiring the Option, and, if and when the Company exercises the Option, it
will be acquiring the Option Shares issuable upon the exercise thereof for its
own account and not with a view to distribution or resale in any manner which
would be in violation of the Securities Act.
7. Registration Rights.
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(a) Following the termination of the Merger Agreement, Company
(sometimes referred to herein as the "Holder") may by written notice (a
"Registration Notice") to Parent (sometimes referred to herein as the
"Registrant") request the Registrant to register
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under the Securities Act all or any part of the Option Shares acquired by the
Holder pursuant to this Agreement (such Option Shares, together with any other
shares of the Parent's capital stock issuable in lieu of or with respect to such
Option Shares, the "Registrable Securities") in order to permit the public sale
or other disposition of such shares in accordance with the intended method of
sale or other disposition stated by the Holder; provided, however, that any such
Registration Notice must relate to a number of shares equal to at least 2% of
the outstanding Parent Shares and that any rights to require registration
hereunder shall terminate with respect to any shares of the Parent's capital
stock that may be sold pursuant to Rule 144(k) under the Securities Act or at
such time as all of the Registrable Securities may be sold in any three month
period pursuant to Rule 144 under the Securities Act. Upon receipt of a
Registration Notice, the Registrant will have the option exercisable by written
notice delivered to the Holder within ten business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities for cash at a price (the "Option Price") equal to the
product of (i) the number of Registrable Securities so purchased and (ii) the
per share average of the closing sale prices of the Registrant's Common Stock on
the Nasdaq Stock Market for the twenty trading days immediately preceding the
date of the Registration Notice. Any such purchase of Registrable Securities by
the Registrant hereunder will take place at a closing to be held at the
principal executive offices of the Registrant or its counsel at any reasonable
date and time designated by the Registrant in such notice within five business
days after delivery of such notice. The payment for the shares to be purchased
will be made by delivery at the time of such closing of the Option Price in
immediately available funds.
(b) If the Registrant receives a Registration Notice and does not
elect to exercise its option to purchase pursuant to Section 7(a), the
Registrant shall use all reasonable best efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities requested to be registered in the Registration Notice;
provided, however, that (i) the Holder shall not be entitled to more than an
aggregate of two effective registration statements hereunder, and provided
further, that if the Registrant withdraws a filed registration statement at the
request of the Holder (other than as the result of a material adverse change in
the Registrant's business or prospects or the Holder's learning of new material
information concerning the Registrant), then such filing shall be deemed to have
been an effective registration for purposes of this clause (i), (ii) the
Registrant will not be required to file any such registration statement or
maintain its effectiveness during any period of time (not to exceed 45 days
after a Registration Notice in the case of clause (A) below or 60 days after a
Registration Notice in the case of clauses (B) and (C) below) when (A) the
Registrant is in possession of material non-public information which it
reasonably believes would be detrimental to be disclosed at such time and such
information would have to be disclosed if a registration statement were filed or
effective at that time; (B) the Registrant is required under the Securities Act
to include audited financial statements for any period in such registration
statement and such financial statements are not yet available for inclusion in
such registration statement; or (C) the Registrant determines, in its good
faith, reasonable judgment, that such registration would materially interfere
with any financing, acquisition or other material transaction involving the
Registrant and (iii) the Registrant will not be required to maintain the
effectiveness of any such
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registration statement for an aggregate period greater than 180 days. If
consummation of the sale of any Registrable Securities pursuant to a
registration hereunder does not occur within 180 days after the filing with the
SEC of the initial registration statement therefor, the provisions of this
Section 7 shall again be applicable to any proposed registration. The Registrant
shall use all reasonable best efforts to cause any Registrable Securities
registered pursuant to this Section 7 to be qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder may reasonably
request and shall continue such registration or qualification in effect in such
jurisdictions until the Holder has sold or otherwise disposed of all of the
securities subject to the registration statement; provided, however, that the
Registrant shall not be required to qualify to do business in, or consent to
general service of process in, any jurisdiction by reason of this
provision.
(c) The registration rights set forth in this Section 7 are subject to
the condition that the Holder shall provide the Registrant with such information
with respect to the Holder's Registrable Securities, the plan for distribution
thereof, and such other information with respect to the Holder as, in the
reasonable judgment of counsel for the Registrant, is necessary to enable the
Registrant to include in a registration statement all facts required to be
disclosed with respect to a registration thereunder, including the identity of
the Holder and the Holder's plan of distribution.
(d) A registration effected under this Section 7 shall be effected at
the Registrant's expense, except for underwriting discounts and commissions and
the fees and expenses of counsel to the Holder, and the Registrant shall use all
reasonable best efforts to: (i) provide such documentation (including
certificates, opinions of counsel and "comfort" letters from auditors) as are
customary in connection with underwritten public offerings and as an underwriter
may reasonably require, (ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statements as may be necessary to comply with the
provisions of the Securities Act and (iii) furnish to the Holder and to any
underwriter of such securities such number of copies of the final prospectus and
such other documents as the Holder or underwriters may reasonably request. In
connection with any registration which the Holder requests be underwritten, the
Holder and the Registrant agree to enter into an underwriting agreement
reasonably acceptable to each such party, in form and substance customary for
transactions of this type with the underwriters participating in such offering.
(e) Indemnification
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(i) The Registrant will indemnify the Holder, each of the
Holder's directors and officers and each person who controls the Holder within
the meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any action or
litigation, commenced or
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threatened (each, a "Damage Claim"), arising out of or based on (A) any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, (B) any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or (C) any violation by the Registrant of any rule or regulation
promulgated under the Securities Act, the Securities Exchange Act of 1934, as
amended, any federal or state securities law or any rule or regulation
promulgated under any of them applicable to the Registrant (each matter in
clause (A), (B) or (C), a "Violation"), in each case in connection with any such
registration, qualification or compliance, and the Registrant will reimburse the
Holder and, each of its directors and officers and each person who controls the
Holder within the meaning of Section 15 of the Securities Act, and each
underwriter for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such Damage Claim,
provided that the Registrant will not be liable in any such case to the extent
that any such Damage Claim arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Registrant by the Holder or
director or officer or controlling person or underwriter seeking
indemnification, and provided, further, that the indemnity agreement contained
in this Section 7(e)(i) shall not apply to amounts paid in settlement of any
such Damage Claim if such settlement is effected without the consent of the
Registrant, which consent shall not be unreasonably withheld.
(ii) The Holder will indemnify the Registrant, each of the
Registrant's directors and officers and each underwriter of the Registrant's
securities covered by such registration statement and each person who controls
the Registrant within the meaning of Section 15 of the Securities Act, against
all Damage Claims arising out of or based on any Violation in connection with
any such registration, qualification or compliance, and will reimburse the
Registrant, such directors, officers or control persons or underwriters for any
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such Damage Claim, in each case to the
extent, but only to the extent, that such Violation occurs in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Registrant by the Holder
expressly for use therein, provided that in no event shall any indemnity under
this Section 7(e) exceed the gross proceeds of the offering received by the
Holder and provided, further that the indemnity agreement contained in this
Section 7(e)(ii) shall not apply to amounts paid in settlement of any such
Damage Claim if such settlement is effected without the consent of the Holder,
which consent shall not be unreasonably withheld.
(iii) Each party entitled to indemnification under this Section 7(e)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
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Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, however, that the Indemnifying Party
shall pay such expense if representation of the Indemnified Party by counsel
retained by the Indemnifying Party would be inappropriate due to actual or
potential differing interests between the Indemnified Party and any other party
represented by such counsel in such proceeding, and provided, further that the
failure of any Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this Section 7(e) unless
the failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action. No Indemnifying Party, in the defense of
any such claim or litigation shall, except with the consent of each Indemnified
Party, consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. No Indemnifying Party shall be required to
indemnify any Indemnified Party with respect to any settlement entered into
without such Indemnifying Party's prior consent (which shall not be unreasonably
withheld).
(iv) If the indemnification provided for in this Section 7(e) is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any Damage Claim, then the Indemnifying Party, in lieu of
indemnifying the Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party with respect to such Damage Claim in the
proportion that is appropriate to reflect the relative fault of the Indemnifying
Party and the Indemnified Party in connection with the statements or omissions
that resulted in such Damage Claim, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact or the omission
to state a material fact relates to information supplied by the Indemnifying
Party or by the Indemnified Party, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. In any such case, (A) the Holder will not be required to contribute
any amount in excess of the aggregate public offering price of all such
Registrable Securities offered and sold by the Holder pursuant to such
registration statement; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
8. Adjustment Upon Changes in Capitalization; Rights Plans
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(a) In the event of any change in the Parent Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the Merger),
recapitalizations, combinations, exchanges of shares and the like, the type and
number of shares or securities subject to the Option shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction so that Company shall receive, upon exercise of the Option, the
number and class of shares or other securities or property that Company would
have
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received in respect of the Parent Shares if the Option had been exercised
immediately prior to such event or the record date therefor, as applicable.
(b) Prior to such time as the Option is terminated, and at any time
after the Option is exercised (in whole or in part, if at all), the Parent shall
not (i) adopt (nor permit the adoption of) a new stockholders rights plan that
contains provisions for the distribution or exercise of rights thereunder as a
result of Company or any affiliate or transferee being the beneficial owner of
shares of the Parent by virtue of the Option being exercisable or having been
exercised (or as a result of beneficially owning shares issuable in respect of
any Option Shares), or (ii) take any other action which would prevent or disable
Company from exercising its rights under this Agreement or enjoying the full
rights and privileges possessed by other holders of Parent Shares generally with
respect to the Option Shares obtained by the Holder upon exercise of the Option.
9. Repurchase of Shares. Parent shall have the right to purchase for cash
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(the "Repurchase Right") all, but not less than all, of the Option Shares then
beneficially owned by Company at an aggregate price for all such shares
(regardless of the number of such shares) equal to the Adjusted Profit Cap.
Parent's right to exercise the Repurchase Right shall expire on the twentieth
business day following the two year anniversary of the termination of the Merger
(the "Merger Termination Date"). In the event Parent wishes to exercise the
Repurchase Right, Parent shall send a written notice to Company specifying a
date (not later than ten business days and not earlier than the second business
day following the date such notice is given) for the closing of such repurchase
(the "Repurchase Notice"), provided, however that Parent may not repurchase any
Option Shares hereunder prior to the date that is one calendar year following
the date on which the Merger Agreement is terminated. The closing of the
repurchase of the Option Shares shall take place at the principal offices of
Parent upon such specified date. Upon exercise of Parent's right to repurchase
all outstanding Option Shares and full payment therefor to Company pursuant to
this Section 9, any and all right of Company to future exercises of the Option
shall be terminated. Notwithstanding anything to the contrary herein, if
application of the Adjusted Profit Cap formula below yields a number that is
less than zero, Parent may exercise its Repurchase Right as provided in this
Section 9, and upon such exercise, Company shall deliver all Option Shares it
holds to Parent for cancellation, and neither Company nor Parent shall pay each
other any amount in connection with such exercise of the Repurchase Right.
For the purposes of this Agreement, the "Adjusted Profit Cap" means the
difference of (i) the Profit Cap minus (ii) the sum of (A) any Termination Fee
received by Company under Section 7.3(c) of the Merger Agreement plus (B) the
proceeds received by Company for any sales or other dispositions of Option
Shares (including pursuant to Parent's exercise of its rights to purchase Option
Shares under Section 7(a) hereof) or the Option, and any dividends or
distributions received by Company declared on Option Shares, in each case,
through the date of the closing of the repurchase under this Section 9; provided
that the Adjusted Profit Cap shall never be less than zero.
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10. Restrictive Legends. Each certificate representing Option Shares
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issued to Company hereunder (other than certificates representing shares sold in
a registered public offering pursuant to Section 7) shall include a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD
ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
11. Listing. The Parent, upon the request of Company, shall promptly file
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an application to list the Parent Shares to be acquired upon exercise of the
Option for quotation on the Nasdaq Stock Market and shall use its reasonable
efforts to obtain approval of such listing as soon as practicable.
12. Binding Effect. This Agreement shall be binding upon and inure to the
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benefit of the parties hereto and their respective successors and permitted
assigns. Except as set forth in Section 7, nothing contained in this Agreement,
express or implied, is intended to confer upon any person other than the parties
hereto and their respective successors and permitted assigns any rights or
remedies of any nature whatsoever by reason of this Agreement.
13. Specific Performance; Fees.
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(a) The parties hereto recognize and agree that if for any reason any
of the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, immediate and irreparable harm or
injury would be caused for which money damages would not be an adequate remedy.
Accordingly, each party agrees that in addition to other remedies the other
party shall be entitled to an injunction restraining any violation or threatened
violation of the provisions of this Agreement or the right to enforce any of the
covenants or agreements set forth herein by specific performance. In the event
that any action shall be brought in equity to enforce the provisions of the
Agreement, neither party will allege, and each party hereby waives the defense,
that there is an adequate remedy at law.
(b) If any action, suit or other proceeding (whether at law, in equity
or otherwise) is instituted concerning or arising out of this Agreement or any
transaction contemplated hereunder, the prevailing party shall recover, in
addition to any other remedy granted to such party therein, all such party's
costs and attorneys fees incurred in connection with the prosecution or defense
of such action, suit or other proceeding.
14. Entire Agreement. This Agreement and the Merger Agreement (including
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the appendices and exhibits thereto) constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
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15. Further Assurances. Each party will execute and deliver all such
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further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
16. Severability. In the event that any provision of this Agreement or
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the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to
replace such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
17. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given upon delivery either personally or by
commercial delivery service, or sent via telecopy (receipt confirmed) to the
parties at the following addresses or telecopy numbers (or at such other address
or telecopy numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Kana Communications, Inc.
000 Xxx Xxxx
Xxxxxxx Xxxx, XX 00000
Attention: Xxx Xxxx
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxxxx, Phleger & Xxxxxxxx LLP
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) if to Company, to:
Broadbase Software, Inc.
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxxxx Bay
Facsimile No.: (000) 000-0000
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with a copy to:
Fenwick & West LLP
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
18. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
20. Expenses. Except as otherwise expressly provided herein or in the
--------
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party incurring
such expenses.
21. Amendments; Waiver. This Agreement may be amended by the parties
------------------
hereto and the terms and conditions hereof may be waived only by an instrument
in writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.
22. Assignment. Neither of the parties hereto may sell, transfer, assign
----------
or otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that the rights and obligations hereunder
shall inure to the benefit of and be binding upon any successor or permitted
assign of a party hereto. No consent shall be required in connection with a
merger, consolidation, reorganization, sale of substantially all assets or
similar transaction with respect to a party hereto. Any purported assignment in
violation of this Section shall be void.
23. Public Announcement. Parent shall consult with Company and Company
-------------------
shall consult with Parent before issuing any press release with respect to the
initial announcement of this Agreement or the transactions contemplated hereby
and neither party shall issue any such press release prior to such consultation
except as may be required by law.
24. Waiver Of Jury Trial. EACH OF PARENT AND COMPANY HEREBY IRREVOCABLY
--------------------
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE
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ACTIONS OF PARENT OR COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
* * * * *
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Exhibit D
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In Witness Whereof, the parties hereto have caused this Stock Option
Agreement to be executed by their duly authorized respective officers as of the
date first written above.
Broadbase Software, Inc
By: /s/ Xxxxx Bay
-----------------------------
Name: Xxxxx Bay
Title: Chief Executive Officer
Kana Communications, Inc.
By: /s/ Xxxxx X. Xxxx
-----------------------------
Name: Xxxxx X. Xxxx
Title: Chief Executive Officer
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