Exhibit 4.13
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made and entered into as of February 5,
2002, by and between KANA Software, Inc., a Delaware corporation (the
"Company"), and the purchaser whose name and address is set forth on the
signature page hereof (the "Purchaser").
1. Authorization and Sale of the Shares. Subject to the terms and
conditions of this Agreement, the Company has authorized the issuance and sale
of approximately $40,000,000 purchase price of shares (the "Shares") of its
common stock, par value $0.001 per share (the "Common Stock").
2. Agreements to Sell and Purchase. On the basis of the representations
and warranties contained in this Agreement, and subject to its terms and
conditions, the Company hereby agrees to sell to the Purchaser, and the
Purchaser agrees to purchase from the Company, the number of Shares set forth on
the signature page hereto at the aggregate purchase price set forth on such
signature page (the "Purchase Price").
The Company proposes to enter into purchase agreements in substantially
the form of this Agreement with certain other purchasers (collectively, the
"Other Purchasers") and expects, but is not obligated, to complete sales of
Shares to them. The Purchaser and the Other Purchasers are hereinafter sometimes
collectively referred to as the "Purchasers," and this Agreement and the
purchase agreements executed by the Other Purchasers are hereinafter sometimes
collectively referred to as the "Agreements."
3. Payment and Delivery. Payment for the Shares shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Shares (such payment and delivery hereinafter referred to as
the "Closing") at 10:00 a.m., New York City time, on February 8, 2002, or at
such other time on the same or such other date, not later than February 8, 2002,
as shall be agreed by the Company and the Purchaser. The time and date of such
payment are hereinafter referred to as the "Closing Date." Payment for the
Shares shall be made through an escrow agent on terms and instructions set forth
in an Escrow Agreement dated the date hereof among the Company, the Purchaser
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, as placement agent, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
Co. Incorporated, as escrow agent.
Certificates for the Shares shall be registered in the name of the
Purchaser or if so indicated on the signature page hereto, in the name of a
nominee designated by the Purchaser. The certificates evidencing the Shares
shall be delivered to the Purchaser on the Closing Date, with any transfer taxes
payable in
connection with the transfer of the Shares to the Purchaser duly paid, against
payment of the Purchase Price therefor.
4. Conditions to the Company's Obligations. The Company's obligation to
issue and sell the Shares to the Purchaser is subject to the following
conditions:
(a) Receipt by the Company of Federal or other immediately available
funds in the full amount of the Purchase Price; and
(b) accuracy of the representations and warranties made by the
Purchasers and the fulfillment in all material respects of those
undertakings of the Purchasers to be fulfilled prior to the Closing.
5. Conditions to the Purchaser's Obligations. The obligations of the
Purchaser to purchase and pay for the Shares on the Closing Date are subject to
the following conditions:
(a) The Purchaser shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect that the representations and warranties
of the Company contained in this Agreement are true and correct as of
the Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(b) The Purchaser shall have received on the Closing Date an
opinion of Fenwick & West LLP, counsel for the Company, dated the
Closing Date, substantially in the form set forth in Exhibit A. Such
opinion shall be rendered to the Purchaser at the request of the
Company and shall so state therein.
(c) The Purchaser shall have received such closing documents in
form and substance as are customary for transactions of this nature.
6. Representations, Warranties and Covenants of the Company. The
Company represents and warrants to, and covenants with, the Purchaser that as of
the date of this Agreement and as of the Closing Date:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") all documents required to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the 12 months preceding the date of this
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Agreement. The following documents (collectively, the "Exchange Act
Documents") complied when filed in all material respects with the
Exchange Act and the applicable rules and regulations of the Commission
thereunder, and did not, when so filed, contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading:
(i) Quarterly Report on Form 10-Q for the Quarters ended March
31, 2001, June 30, 2001 and September 30, 2001;
(ii) Annual Report on Form 10-K for the Year ended December
31, 2000;
(iii) Definitive Proxy Statement and Prospectus filed with the
Commission on May 18, 2001; and
(iv) All other documents, if any, filed by the Company with
the Commission since December 31, 2000.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own or lease
its properties and to conduct its business as currently conducted and
as described in the Exchange Act Documents and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(c) The description of the Company's results of operations for the
quarter ended December 31, 2001 and related financial data for such
quarter contained in the Company's press release dated January 22, 2002
(but excluding fiscal year 2002 guidance) and the information contained
in the Company's press release dated February 1, 2002 (collectively,
the "Press Releases"), and its Exchange Act Documents, taken as a whole
and as amended to the date hereof, does not as of the date hereof
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(d) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under
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the laws of the jurisdiction of its incorporation, has the corporate
power and authority to own or lease its properties and to conduct its
business as currently conducted and described in the Exchange Act
Documents and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification,
except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; all of the issued shares of capital
stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by the Company (or in the case of certain foreign
subsidiaries, are beneficially owned by the Company), free and clear of
all liens, encumbrances, equities or claims, except for a general lien
held by Silicon Valley Bank on substantially all of the Company's
assets.
(e) This Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Company, enforceable
in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity and except as rights to indemnification
and contribution in Section 11 hereof may be limited under applicable
law.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Exchange Act
Documents.
(g) The shares of common stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid
and non-assessable.
(h) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.
(i) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
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governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states or
foreign jurisdictions in connection with the offer and sale of the
Shares and by Federal and state securities laws with respect to the
Company's obligations under Sections 8 and 10 of this Agreement.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, since
December 31, 2001.
(k) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in the Exchange Act
Documents and proceedings that would not reasonably be expected to have
a material adverse effect on the Company and its subsidiaries, taken as
a whole, or on the power or ability of the Company to perform its
obligations under this Agreement to consummate the transactions
contemplated by this Agreement.
(l) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, alone or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.
(m) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) which would, alone or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
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(n) Except as disclosed in the Exchange Act Documents, the Company
and its subsidiaries own or possess, or can acquire on reasonable
terms, all material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names currently
employed by them in connection with the business now operated by them,
except where the failure to own, possess or acquire any of the
foregoing would not result in a material adverse effect on the Company
and its subsidiaries, taken as a whole, and neither the Company nor any
of its subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, alone or in the aggregate, could reasonably be
expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) The Company is not, and after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof will not
be, required to register as, an "investment company" as such term are
defined in the Investment Company Act of 1940, as amended.
(p) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act of 1933, as amended (the
"Securities Act"), an "Affiliate") of the Company has, directly, or
through any agent, (i) sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the
Shares in a manner that would require the registration under the
Securities Act of the Shares; or (ii) offered, solicited offers to buy
or sold the Shares by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act; and neither the Company
nor any Affiliate of the Company will engage in any of the actions
described in clauses (i) and (ii) of this paragraph.
(q) Subject to the accuracy of the Purchaser's representations
herein, it is not necessary in connection with the offer, sale and
delivery of the Shares to the Purchasers in the manner contemplated by
this Agreement to register the Shares under the Securities Act.
(r) The Company shall comply with all requirements of the National
Association of Securities Dealers, Inc. with respect to the issuance of
the Shares and the listing thereof on The Nasdaq National Market.
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(s) The Company has not taken and will not, in violation of
applicable law, take, any action designed to or that might reasonably
be expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares.
(t) The Company is eligible to file a registration statement on Form
S-3.
(u) The Company shall, as soon as practicable following the
execution of this and any other Agreements, but in no event later than
the next business day after the date of this Agreement, publicly
disclose the sale of Shares pursuant to such Agreements to the extent
required by the Exchange Act and the applicable rules and regulations
of the Commission thereunder; provided that, except as required by law,
no disclosure will be made identifying the Purchaser.
(v) No stockholder of the Company has any right (which has not been
waived) to require the Company to register the sale of any shares owned
by such stockholder under the Securities Act in the Registration
Statement (as defined in Section 8(a)) to be filed by the Company on
behalf of the Purchaser pursuant to Section 8(a).
7. Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents and warrants to, and covenants with, the
Company that:
(a) The Purchaser is a qualified institutional buyer as defined in
Rule 144A under the Securities Act (a "QIB") and has requested,
received, reviewed and considered all information it deems relevant in
making an informed decision to purchase the Shares. The Purchaser is
experienced in evaluating companies such as the Company. At no time was
the Purchaser presented with or solicited by any publicly issued or
circulated newspaper, mail, radio, television or, to the Purchaser's
knowledge, any other form of general advertising or solicitation in
connection with the offer, sale and purchase of the Shares.
(b) The Purchaser is acquiring the number of Shares set forth on the
signature page hereto in the ordinary course of its business and for
its own account for investment only and with no present intention of
distributing any of such Shares or any arrangement or understanding
with any other persons regarding the distribution of such Shares, other
than as contemplated in Section 8 of this Agreement.
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(c) The Purchaser will not, directly or indirectly, offer, sell,
pledge, transfer or otherwise dispose of (or solicit offers to buy,
purchase or otherwise acquire or take a pledge of) any of the Shares,
except in compliance with the Securities Act and the applicable rules
and regulations of the Commission thereunder.
(d) The Purchaser will have, on or prior to February 6, 2002,
furnished to the Company a fully completed Selling Stockholder
Questionnaire attached as Appendix I hereto for use in preparation of
the Registration Statement and all of the information contained therein
will be true and correct as of such date and as of the Closing Date.
(e) The Purchaser will notify the Company immediately of any change
in any such information until such time as the Purchaser has sold all
of its Shares or until the Company is no longer required to keep the
Registration Statement effective.
(f) In connection with its decision to purchase the number of Shares
set forth on the signature page hereto, the Purchaser (i) has relied
only upon the Exchange Act Documents and Press Releases, the
representations and warranties of the Company contained herein and the
information received pursuant to Section 7(a), and (ii) has not relied
on any information or advice furnished by or on behalf of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated.
(g) The Purchaser will not make any sale of the Shares without
complying with the provisions of this Agreement and without causing the
prospectus delivery requirement under the Securities Act to be
satisfied, and the Purchaser acknowledges that the certificates
evidencing the Shares will be imprinted with a legend in substantially
the following form (and a stop-transfer order may be placed against
transfer of the certificates for the Shares):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE
SECURITIES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SAID
ACT UNTIL THE PASSAGE OF TWO YEARS FROM [CLOSING DATE], UNLESS THE
SECURITIES ARE OTHERWISE SOLD, TRANSFERRED OR ASSIGNED IN COMPLIANCE
WITH ALL APPLICABLE SECURITIES LAWS, AND THE COMPANY RECEIVES AN
OPINION OF COUNSEL AS TO THE EXEMPTION FROM
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REGISTRATION OF SUCH SALE, TRANSFER OR ASSIGNMENT."
The Purchaser acknowledges that there may occasionally be times when
the Company determines that it must suspend the use of the Prospectus
(as defined in Section 11(a)) forming part of the Registration
Statement, as set forth in Section 10.
(h) The Purchaser will notify the Company promptly of the sale of
any of its Shares, other than (i) sales pursuant to a Registration
Statement contemplated in Section 8 of this Agreement and (ii) sales
following termination of the transfer restrictions pursuant to Section
12, and the Purchaser will furnish any information reasonably requested
by the Company, including an opinion of counsel reasonably satisfactory
to the Company, to evidence the exemption from the registration
requirements of the Securities Act, the applicable rules and
regulations of the Commission thereunder, and state securities laws, in
reliance upon which such sales have been made.
(i) This Agreement has been duly authorized, executed and delivered
by, and is a valid and binding agreement of, the Purchaser, enforceable
in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity and except as rights to indemnification
and contribution in Section 11 hereof may be limited under applicable
law.
(j) The Purchaser will not, prior to the effectiveness of the
Registration Statement, if then prohibited by law or regulation, sell,
offer to sell, solicit offers to buy, dispose of, loan, pledge or
grant any right with respect to (collectively, a "Disposition"), the
Common Stock, nor will the Purchaser, if then prohibited by law or
regulation, engage in any hedging or other transaction which is
designed or could reasonably be expected to lead to or result in a
Disposition of Common Stock by the Purchaser or any person or entity.
Such prohibited hedging or other transaction would include, without
limitation, effecting any short sale or having in effect a short
position (whether such short sale or position is against the box and
regardless of when such position was entered into) or any purchase,
sale or grant of any right (including, without limitation, any put or
call option) with respect to the Common Stock or with respect to any
security (other than a broad-based market basket or index) that
includes or derives any significant part of its value from the Common
Stock.
(k) The Purchaser will hold in confidence all information concerning
this Agreement and the placement of shares hereunder and under the
Other Agreements until the earlier of such time as the Company
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has made a public announcement concerning this Agreement and the
placement of Shares hereunder, or this Agreement is terminated.
Purchaser acknowledges that for purposes of the foregoing, "hold in
confidence" shall include not trading securities of the Company.
(l) The Purchaser represents that based on the Company having
19,397,678 shares of Common Stock outstanding at the Closing Date
(before giving effect to the sale and purchase of Shares pursuant to
this Agreement), the Purchaser, together with its ultimate parent
entity and all entities controlled by the same ultimate parent as the
Purchaser (such entities, including the Purchaser, hereinafter
collectively referred to as the "Purchaser Affiliates"), will not hold
in excess of 10% of the Company's outstanding voting securities as a
result of the sale and purchase of Shares pursuant to this Agreement,
and (ii) all voting securities of the Company that the Purchaser
Affiliates will hold, directly or indirectly, at the Closing Date
(after giving effect to the sale and purchase of Shares pursuant to
this Agreement), will be held solely for the purpose of investment such
that these securities will be held by the Purchaser Affiliates with no
intention on the part of any of them to participate in the formulation,
determination or direction of the basic business decisions of the
Company. As a result of (i) and (ii), the Purchaser Affiliates are
relying on the exemption available to them as passive investors under
Section 7A(c)(9) of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and regulations promulgated thereunder (including 16
C.F.R. Sec. 802.9) in their determination that the sale and purchase of
Shares pursuant to this Agreement does not require them to submit any
HSR Notification and Report Form.
(m) The Purchaser understands that if the Registration Statement is
not declared effective by the Commission on or before February 14,
2002, the Commission will not declare it effective prior to the Company
filing with the Commission its audited financial statements for its
fiscal year ended December 31, 2001, which the Company is required to
do in connection with filing its annual report on Form 10-K for such
fiscal year.
8. Shelf Registration. The Company shall:
(a) use its best efforts to prepare and file or cause to be prepared
and filed with the Commission, as soon as practicable but in any event
by February 7, 2002 (the "Filing Deadline Date") a registration
statement (the "Registration Statement") registering the resale from
time to time by Purchasers of all of the Shares. The Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of such Shares for resale by the Purchasers from time to
time through the
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automated quotation system of The Nasdaq National Market or the
facilities of a national security exchange on which the Common Stock is
then traded, or in privately negotiated transactions. The Company shall
use its reasonable efforts, subject to receipt of necessary information
from the Purchaser, to cause the Registration Statement to be declared
effective under the Securities Act as promptly as is practicable but in
any event by the date (the "Effectiveness Deadline Date") that is sixty
(60) days after the date the Registration Statement is filed.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep such Registration Statement continuously effective
for a period not to exceed the earlier of (i) the second anniversary of
the Closing Date, (ii) such time as such Purchase may immediately sell
all Shares purchased by such Purchaser and all other shares of Common
Stock of the Company then held by such Purchaser that are sellable
under Rule 144(b) (without giving effect to the volume limitations of
Rule 144(e)) or (iii) such time as all Shares purchased by such
Purchaser pursuant to this Agreement have been sold pursuant to a
registration statement or pursuant to Rule 144 under the Securities Act
(such period, the "Effectiveness Period"); cause the related prospectus
to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 (or any similar
provisions then in force) under the Securities Act; and use its best
efforts to comply with the provisions of the Securities Act applicable
to it with respect to the disposition of all securities covered by such
Registration Statement during the Effectiveness Period in accordance
with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement as so amended or such Prospectus
as so supplemented.
(c) As promptly as practicable give notice to the Purchaser (i) when
any Prospectus, Prospectus supplement, or the Registration Statement or
a post-effective amendment to the Registration Statement has been filed
with the Commission and, with respect to a Registration Statement or
any post-effective amendment, when the same has been declared
effective.
(d) Use reasonable efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement or the
lifting of any suspension of the qualification (or exemption from
qualification) of any of the Shares for sale in any jurisdiction in
which they have been qualified for sale, in either case at the earliest
possible moment, and provide prompt notice to the Purchaser of the
withdrawal of any such order.
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(e) During the Effectiveness Period, deliver to the Purchaser in
connection with any sale by the Purchaser of Shares pursuant to the
Registration Statement, without charge, as many copies of the
Prospectus or Prospectuses relating to such Shares (including each
preliminary prospectus) and any amendment or supplement thereto as such
the Purchaser may reasonably request.
(f) File documents required of the Company for customary Blue Sky
clearance in states specified in writing by the Purchaser; provided
that the Company will not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Agreement or
(ii) take any action that would subject it to general service of
process in suits or to taxation in any such jurisdiction where it is
not then so subject.
(g) Bear all fees and expenses incurred in connection with the
performance by the Company of its obligations under paragraphs (a)
through (f) of this Section whether or not the Registration Statement
is declared effective, other than fees and expenses, if any, of counsel
or other advisors to the Purchaser or underwriting discounts, brokerage
fees and commissions incurred by the Purchaser.
(h) Not allow any stockholders other than the Purchasers to include
their shares in the Registration Statement; provided this paragraph
8(h) shall not apply if and to the extent the Company amends a
registration statement currently on file with the Securities and
Exchange Commission to include sales of the Shares by the Purchasers.
9. Delay in Filing or Effectiveness of Registration Statement. If the
Registration Statement is not filed by the Company with the Commission on or
prior to the Filing Deadline Date, then for each day following the Filing
Deadline Date, until but excluding the date the Registration Statement is filed,
or if the Registration Statement is not declared effective by the Commission by
the Effectiveness Deadline Date, then for each day following the Effectiveness
Deadline Date, until but excluding the date the Commission declares the
Registration Statement effective, the Company shall, for each such day, pay the
Purchaser, as liquidated damages and not as a penalty, an amount equal to a
weekly rate (expressed as a percentage of the Purchase Price) of (a) .25% with
respect to any failure to timely file the Registration Statement and (b) .15%
for days 61-90 and .25% thereafter with respect to any failure to have the
Registration Statement declared effective; and for any such day, such payment
shall be made no later than the first business day of the calendar month next
succeeding the month in which such day occurs.
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The parties agree that the sole damages payable for a violation of the
terms of this Agreement with respect to which liquidated damages are expressly
provided shall be such liquidated damages. Nothing shall preclude the Purchaser
from pursuing or obtaining specific performance or other equitable relief with
respect to this Agreement.
The parties hereto agree that the liquidated damages provided for in
this Section 9 constitute a reasonable estimate of the damages that may be
incurred by the Purchaser by reason of the failure of the Registration Statement
to be filed or declared effective in accordance with the provisions hereof.
10. Transfer of Shares After Registration; Suspension.
(a) The Purchaser agrees that it will not effect any disposition of
the Shares or its right to purchase the Shares that would constitute a
sale within the meaning of the Securities Act except as contemplated in
the Registration Statement referred to in Section 8(a) and as described
below or as otherwise permitted by law, and that it will promptly
notify the Company of any changes in the information set forth in the
Registration Statement regarding the Purchaser or its plan of
distribution.
(b) The Company shall, as promptly as practicable, give notice to
the Purchaser (i) of any request, following the effectiveness of the
Registration Statement under the Securities Act, by the Commission or
any other federal or state governmental authority for amendments or
supplements to any Registration Statement or related prospectus or for
additional information, (ii) of the issuance by the Commission or any
other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceedings for that purpose, (iii) of
the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any
of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (iv) of the occurrence
of a Material Event (as defined in Section 10(c)) and (v) of the
determination by the Company that a post-effective amendment to a
Registration Statement will be filed with the Commission, which notice
may, at the discretion of the Company (or as required pursuant to
paragraph 10(c)), state that it constitutes a Deferral Notice, in which
event the provisions of Section 10(c) shall apply.
(c) The Company shall, upon (A) the issuance by the Commission of a
stop order suspending the effectiveness of the Registration Statement
or the initiation of proceedings with respect to the Registration
Statement under Section 8(d) or 8(e) of the Securities Act, (B) the
occurrence of any event or the existence of any fact (a "Material
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Event") as a result of which the Registration Statement shall contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, or the related prospectus shall contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or (C) the occurrence or existence of any pending
corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the
Registration Statement and the related Prospectus, (i) in the case of
clause (B) above, subject to the next sentence, as promptly as
practicable prepare and file, if necessary pursuant to applicable law,
a post-effective amendment to such Registration Statement or a
supplement to the related Prospectus or any document incorporated
therein by reference or file any other required document that would be
incorporated by reference into such Registration Statement and
Prospectus so that such Registration Statement does not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and such prospectus does not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, as thereafter delivered to the purchasers of the Shares
being sold thereunder, and, in the case of a post-effective amendment
to the Registration Statement, subject to the next sentence, use its
reasonable efforts to cause it to be declared effective as promptly as
is practicable, and (ii) give notice to the Purchaser that the
availability of the Registration Statement is suspended (a "Deferral
Notice") and, upon receipt of any Deferral Notice, the Purchaser agrees
not to sell any Shares pursuant to the Registration Statement until
such Purchaser's receipt of copies of the supplemented or amended
prospectus provided for in clause (i) above, or until it is advised in
writing by the Company that the Prospectus may be used, and has
received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in such Prospectus.
The Company will use all reasonable efforts to ensure that the use of
the Prospectus may be resumed (x) in the case of clause (A) and (B)
above, as promptly as is practicable, and (y) in the case of clause (C)
above, as soon as, in the sole judgment of the Company, public
disclosure of such Material Event would not be prejudicial to or
contrary to the interests of the Company or, if necessary to avoid
unreasonable burden or expense, as soon as practicable thereafter. The
Company shall be entitled to exercise its right under this Section
10(c) to suspend the availability of the Registration Statement or any
Prospectus no more than two (2) times in any twelve-month period, and
any such period
14
during which the availability of the Registration Statement and any
Prospectus is suspended (the "Deferral Period") shall not exceed
forty-five (45) days; provided that any two Deferral Periods in a
twelve-month period may not exceed a total of sixty (60) days. The
Company shall use all commercially reasonable efforts to limit the
duration and number of any Deferral Periods. The Purchaser hereby
agrees that upon receipt of any Deferral Notice from the Company, the
Purchaser shall, and shall cause each of its officers, directors,
employees, affiliates, advisors, agents and representatives to, keep
confidential all nonpublic information set forth in such notice
including the existence and terms of such Deferral Notice.
11. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless the Purchaser and each person, if any, who controls the Purchaser
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the prospectus included
in the Registration Statement, as amended or supplemented by any amendment or
prospectus supplement, including post-effective amendments, and all material
incorporated by reference in such prospectus (the "Prospectus") or in any
amendment or supplement thereto or in any preliminary prospectus, or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by (i)
any such untrue statement or omission or alleged untrue statement or omission
based upon information relating to the Purchaser furnished to the Company in
writing by such Purchaser expressly for use therein, or (ii) the failure of such
Purchaser to comply with the covenants and agreements contained in Sections 7
and 10 hereof respecting resale of the Shares.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
its directors and its officers and each person, if any, who controls
the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with
defending or investigating any such action or claim), insofar as such
losses, claims, damages or liabilities are caused by (i) the failure of
the Purchaser to comply with the covenants and agreements contained in
Sections 7 and 10 hereof respecting resale of the Shares, (ii) any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus or in any
amendment or
15
supplement thereto or in any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
information relating to the Purchaser furnished in writing by the
Purchaser to the Company expressly for use in the Registration
Statement or Prospectus.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 11(a) or 11(b), such
person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified
party, shall retain counsel reasonably satisfactory to the indemnified
party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the
fees and disbursements of such counsel related to such proceeding. In
any such proceeding, any indemnified party shall have the right to
retain its own counsel, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. The indemnifying
party shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
16
(d) To the extent that the indemnification provided for under
Section 11(a) or 11(b) is unavailable to an indemnified party or is
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such paragraph,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received
by the indemnifying party or parties on the one hand and the
indemnified party or parties on the other hand or (ii) if the
allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party or parties on the one hand and of the
indemnified party or parties on the other hand in connection with the
statements or omissions or other matters that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company shall be
deemed to be equal to the total net proceeds from the sale pursuant to
the Purchase Agreement (before deducting expenses) of the Shares to
which such losses, claims, damages or liabilities relate. The relative
benefits received by the Purchaser shall be deemed to be equal to the
value of receiving Shares that are registered under the Securities Act.
The relative fault of the Purchaser on the one hand and the Company on
the other hand shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact, or the
inaccurate or the alleged inaccurate representation or warranty relates
to information supplied by the Purchaser or by the Company and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 11(d) were determined by pro rata
allocation or by any other method or allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to
in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding
this Section 11(d), the Purchaser shall not be required to contribute
any amount in excess of the amount by which the net amount received by
the Purchaser from the sale of the Shares to which such loss relates
exceeds the amount of any damages that such indemnifying party has
otherwise been required to pay
17
by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 11 are not exclusive
and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or equity.
(f) The indemnity and contribution provisions contained in this
Section 11 and the representations, warranties and other statements of
the Company and the Purchaser contained in this Agreement shall survive
the execution of this Agreement and shall remain operative and in full
force and effect regardless of (i) any investigation made by or on
behalf of the Purchaser or any person controlling the Purchaser, or the
Company, or the Company's officers or directors or any person
controlling the Company and (ii) the sale of any Shares by the
Purchaser.
12. Termination of Conditions and Obligations. The conditions precedent
imposed by Sections 7, 8 and 10 upon the transferability of the Shares shall
cease and terminate as to any particular number of the Shares (and any legend on
the Shares will be removed by the Company) at such time as such Shares have been
effectively registered under the Securities Act and sold or otherwise disposed
of in accordance with the intended method of disposition set forth in the
Registration Statement covering such Shares, upon the passage of two years from
the Closing Date, or at such time as an opinion of counsel satisfactory to the
Company shall have been rendered to the effect that such conditions are not
necessary in order to comply with the Securities Act.
13. Information Available. So long as the Registration Statement is
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:
(a) as soon as practicable after it is available (but in the case of
the Company's Annual Report to Stockholders, within 90 days of each
fiscal year of the Company), one copy of:
(i) its Annual Report to Stockholders (which Annual Report
shall contain financial statements audited in accordance with
generally accepted accounting principles by a national firm of
certified public accountants);
(ii) if not included in substance in the Annual Report to
Stockholders, its Annual Report on Form 10-K;
18
(iii) its Quarterly Reports on Form 10-Q; and
(iv) a full copy of the particular Registration Statement
covering the Shares (the foregoing, in each case, excluding exhibits
unless specifically requested); and
(b) upon the reasonable request of the Purchaser, an adequate number
of copies of the Prospectus to supply to any other party requiring such
Prospectus.
14. Placement Agent's Fee. The Purchaser acknowledges that the Company
intends to pay to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, in its capacity as the
placement agent for the Shares, a fee in respect of the sale of the Shares to
the Purchaser. Each of the parties to this Agreement hereby represents that, on
the basis of any actions and agreements by it, there are no other brokers or
finders entitled to compensation in connection with the sale of the Shares to
the Purchaser.
15. Rule 144. (a) The Company covenants that, if at any time before the
end of the Effectiveness Period the Company is not subject to the reporting
requirements of the Exchange Act, it will cooperate with the Purchaser and take
such further reasonable action as the Purchaser may reasonably request in
writing (including, without limitation, making such reasonable representations
as the Purchaser may reasonably request), all to the extent required from time
to time to enable the Purchaser to sell Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144 and
Rule 144A under the Securities Act and customarily taken in connection with
sales pursuant to such exemptions. Upon the written request of the Purchaser,
the Company shall deliver to the Purchaser a written statement as to whether it
has complied with such reporting requirements, unless such a statement has been
included in the Company's most recent report filed pursuant to Section 13 or
Section 15(d) of Exchange Act. Notwithstanding the foregoing, nothing in this
Section 14 shall be deemed to require the Company to register any of its
securities (other than the Common Stock) under any section of the Exchange Act.
(b) The Company shall file the reports required to be filed by it
under the Exchange Act and shall comply with all other requirements set
forth in the instructions to Form S-3 in order to allow the Company to
be eligible to file registration statements on Form S-3.
16. Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) business day after
being
19
deposited with such courier, if made by overnight courier or (iv) on the date
indicated on the notice of receipt, if made by first-class mail, to the parties
as follows:
(a) if to the Purchaser, at its address on the signature page
hereto;
(b) if to the Company, to:
KANA Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fenwick & West LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Escrow Agent, to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Syndicate Operations
or to such other address as such person may have furnished to the other persons
identified in this Section 16 in writing in accordance herewith.
17. Severability. If any term provision, covenant or restriction of
this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.
18. Modification; Amendment. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented unless pursuant to an instrument in writing signed by the Company
and the ▇▇▇▇▇▇▇▇▇.
▇▇
▇▇. Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
with respect to the subject matter contained herein. Except as provided in this
Agreement, there are no restrictions, promises, warranties or undertakings,
other than those set forth or referred to herein, with respect to such matters.
This Agreement supersedes all prior agreements and undertakings among the
parties with respect to such matters. No party hereto shall have any rights,
duties or obligations other than those specifically set forth in this Agreement.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
21. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York
22. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
21
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
[NAME OF PURCHASER]
By:
------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address:
----------------------------------
Number of Shares:
-------------------------
Aggregate Purchase Price: $
---------------
Tax ID No.:
-------------------------------
Contact Name:
-----------------------------
Telephone:
--------------------------------
Name in which the Shares should be
registered (if different):
----------------
Relationship between the Purchaser and
the person or entity in whose name the
Shares should be registered (if
different):
-------------------------------
------------------------------------------
Agreed to and Accepted by:
KANA Software, Inc.
By:
-------------------------------------------
Name:
Title:
22
EXHIBIT A
OPINION OF COUNSEL FOR THE COMPANY
The opinion of the counsel for the Company, to be delivered pursuant to
Section 5(b) of the Purchase Agreement shall be substantially to the effect (but
may include assumptions and exceptions customary in such opinions) that:
(A) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own or lease its
properties and to conduct its business as currently conducted and as described
in the Exchange Act Documents and, to such counsel's knowledge, is duly
qualified to transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(B) The Purchase Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable
against the Company in accordance with its terms.
(C) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Exchange Act Documents.
(D) The Shares have been duly authorized and, when issued and delivered
in accordance with the terms of the Purchase Agreement against payment by the
Purchasers of the Purchase Price for such Shares as provided therein, will be
validly issued, fully paid and non-assessable, and the issuance of such Shares
will not be subject to any preemptive or similar rights.
(E) Based upon the representations, warranties and agreements of the
Purchaser in Section 7 of the Purchase Agreement, it is not necessary in
connection with the offer, sale and delivery of the Shares to the Purchaser
under the Purchase Agreement to register the Shares under the Securities Act, it
being understood that no opinion is expressed as to any subsequent resale of any
Shares.
23
APPENDIX I
KANA SOFTWARE, INC.
SELLING SECURITYHOLDER QUESTIONNAIRE
FOR INTENDED SALE OF
SHARES OF COMMON STOCK
PURSUANT TO SHELF REGISTRATION STATEMENT
The following questionnaire and agreement (the "Questionnaire") elicits
information necessary to prepare a registration statement on Form S-3 (the
"Shelf Registration Statement") for the registration and resale under Rule 415
of the Securities Act of 1933, as amended (the "Securities Act"), of certain
shares of common stock of KANA Software, Inc. (the "Company") to be filed by the
Company with the Securities and Exchange Commission (the "Commission"), in
accordance with the terms of the Purchase Agreement, dated as of February __,
2002 (the "Purchase Agreement"), between the Company and the undersigned
beneficial owner of shares of common stock of the Company purchased pursuant to
such agreement (the "Selling Securityholder"). All capitalized terms not
otherwise defined herein shall have the meaning ascribed thereto in the Purchase
Agreement.
In order to sell or otherwise dispose of any Shares pursuant to the
Shelf Registration Statement, you generally will be required to be named as a
selling securityholder in the related prospectus, deliver a prospectus to
purchasers of the Shares and be bound by the provisions of the Purchase
Agreement (including certain indemnification provisions, as described below). If
you do not complete this Questionnaire and deliver it to the Company as provided
below you will not be named as a selling securityholder in the prospectus and
therefore will not be permitted to sell any Shares pursuant to the Shelf
Registration Statement. Please complete and deliver this Questionnaire to [▇▇▇▇
▇▇▇▇▇▇▇▇, Esq.] of KANA Software, Inc. as soon as possible and in any event no
later than February __, 2002 [Closing Date].
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of the Shares are advised to consult
their own securities law counsel regarding the consequences of being named or
not being named as a selling securityholder in the Shelf Registration Statement
and the related prospectus.
24
The Selling Securityholder, by signing and returning this
Questionnaire, understands that it will be bound by the terms and conditions of
this Questionnaire and the Purchase Agreement.
Pursuant to the Purchase Agreement, the undersigned has agreed to
indemnify and hold harmless the Company, any of its directors and officers who
sign the Shelf Registration Statement, and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from
and against certain losses arising in connection with statements concerning the
undersigned made in the Company's Shelf Registration Statement or the related
prospectus in reliance upon the information provided in this Questionnaire.
The undersigned hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
25
QUESTIONNAIRE
1. (a) Full Legal Name of Selling Securityholder:/1/
------------------------------------------------------
(b) Except as set forth below in this Item 1(b), the undersigned
does not hold any or all of the Shares on behalf of another
person or entity.
State any exceptions here:
------------------------------------------------------
2. Address of Selling Securityholder:
------------------------------------------------------
------------------------------------------------------
Telephone:
----------------------------
Fax:
-----------------------------------
Contact Person:
-----------------------
3. Beneficial Ownership:
Immediately after the Closing, there will be no equity securities
of the Company of which the undersigned will be the "beneficial
owner"/2/, except as set forth below in this Item 3. The
disclosure indicates the amount of equity securities which the
undersigned beneficially owns, which it has a right to acquire
within 60 days after the Closing Date, and as to which it has
sole voting power, shared voting power, sole investment power or
shared investment power.
------------------------------------------------------
------------------------------------------------------
----------------------------
/1/ If this Questionnaire is being completed by or on behalf of a
person other than an individual, the entity on whose behalf the Questionnaire is
being completed should be stated.
/2/ Defined in Appendix A.
26
------------------------------------------------------
4. Except as set forth below in this Item 4, the undersigned wishes
that all the Shares held by it be offered for the account of the
undersigned in the Registration Statement.
State any exceptions here:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
5. Relationships with the Company:
Except as set forth below, neither the undersigned nor any of
its affiliates, officers, directors or principal equity
holders (5% or more) has held any position or office or has
had any other material relationship with the Company (or its
predecessors or affiliates) during the past three years.
State any exceptions here:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
6. Plan of Distribution:
Except as set forth below, the undersigned (including its
donees or pledgees) intends to distribute the Shares pursuant
to the Shelf Registration Statement only as follows (if at
all): Such Shares may be sold from time to time directly by
the undersigned or, alternatively, through underwriters,
broker-dealers or agents. If the Shares are sold through
underwriters or broker-dealers, the Selling Securityholder
will be responsible for underwriting discounts or commissions
or agent's commissions. Such Shares may be sold in one more or
transactions at fixed prices, at prevailing market prices at
the time of sale, at varying prices determined at the time of
sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve block
27
transactions) (i) on any national securities exchange or
quotation service on which the Shares may be listed or quoted
at the time of sale, (ii) in the over-the-counter market,
(iii) in transactions otherwise than on such exchanges or
services or in the over-the-counter market, or (iv) through
the writing of options. In connection with sales of the Shares
or otherwise, the undersigned may enter into hedging
transactions with broker-dealers, which may in turn engage in
short sales of the Shares in the course of hedging positions
they assume. The undersigned may also sell Shares short and
deliver Shares to close out short positions, or loan or pledge
Shares to broker-dealers that in turn may sell such
securities.
State any exceptions here:
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Note: In no event will such method(s) of distribution take the
form of an underwritten offering of the Shares without the prior
agreement of the Company.
7. State below whether the undersigned is a "member"/3/ of the
National Association of Securities Dealers, Inc. ("NASD"),
"person associated with a member", a direct or indirect
"affiliate" of a "member" or an "underwriter or related person"
with respect to the proposed offering./4/ If the undersigned is a
general or limited partnership, a "No" reply shall be assumed to
confirm that no relationship exists for the undersigned as well
as each of its general or limited partners./5/
Yes____________________ No____________________
----------------------
/3/ Highlighted terms in this Item are defined in Appendix A.
/4/ NASD Rule 2710(b)(6)(A)(iii).
/5/ Item 6 need only be answered if either (i) the Selling
Securityholder is an affiliate of the Company, or (ii) the sale of Shares under
the Shelf Registration Statement requires clearance from the NASD.
28
If yes, identify the NASD member and describe the relationship
with the NASD member, including in the case of a general or
limited partner, the identity of the partner.
The undersigned acknowledges that it understands its obligation to
comply with the provisions of the Exchange Act and the rules thereunder relating
to stock manipulation, particularly Regulation M thereunder (or any successor
rules or regulations), in connection with any offering of the Shares pursuant to
the Shelf Registration Statement. The undersigned agrees that neither it nor any
person acting on its behalf will engage in any transaction in violation of such
provisions.
In accordance with the undersigned's obligation under the Purchase
Agreement to provide such information as may be required by law for inclusion in
the Shelf Registration Statement, the undersigned agrees to promptly notify the
Company of any inaccuracies or changes in the information provided herein that
may occur subsequent to the date hereof at any time while the Shelf Registration
Statement remains effective.
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 above and the
inclusion of such information in the Shelf Registration Statement and the
related prospectus. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Shelf Registration Statement and the related prospectus.
IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Questionnaire to be executed and delivered either in person or by
its duly authorized agent.
Dated:
[NAME OF SELLING
SECURITYHOLDER]
By: _______________________________
Name:__________________________
Title: ________________________
29
APPENDIX A
Definitions of Terms Used
1. You are the "beneficial owner" of a security if you directly or
indirectly, through any contract, arrangement, understanding, relationship, or
otherwise, have or share: (i) voting power which includes the power to vote, or
to direct the voting of, such security, or (ii) investment power which includes
the power to dispose, or to direct the disposition of, such security. You are
deemed the beneficial owner of a security if you, directly or indirectly, create
or use a trust, proxy, power of attorney, pooling arrangement or any other
contract, arrangement, or device with the purpose or effect of divesting
yourself of beneficial ownership of a security or preventing the vesting of such
beneficial ownership. Finally, you are deemed to be the beneficial owner of a
security if you have the right to acquire beneficial ownership of such security
at any time within sixty days, including but not limited to any right to acquire
(a) through the exercise of any option, warrant or right, or (b) through the
conversion of a security, or (c) pursuant to the power to revoke a trust,
discretionary account, or similar arrangement, or (d) pursuant to the automatic
termination of a trust, discretionary account or similar arrangement. If you
have acquired any security or power specified in (a), (b) or (c) above, with the
purpose or effect of changing or influencing the control of the issuer, or in
connection with or as a participant in any transaction having such purpose or
effect, then immediately upon such acquisition you are deemed to be the
beneficial owner of the securities which may be acquired through the exercise or
conversion of such security or power.
All securities of the same class that are beneficially owned by you,
regardless of the form which such beneficial ownership takes, must be aggregated
in calculating the number of shares beneficially owned by you.
The above definition is broad and although you may not actually have or
share voting or investment power with respect to securities owned by persons in
your family or living in your home, you should include such shares in your
beneficial ownership disclosure, and then, as appropriate, disclaim beneficial
ownership of such securities.
2. The term "underwriter or related person" includes, with respect to a
proposed offering, any underwriter, underwriter's counsel, financial consultant
and advisors, finders, members of the selling or distribution group, any member
participating in the proposed offering and any and all other persons associated
with or related to and members of the immediate family of any of such persons.
NASD Rule 2710(a)(6).
3. The NASD defines a "member" as being either any broker or dealer
admitted to membership in the NASD or any individual, partnership,
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corporation or other legal entity admitted to membership in the NASD under the
provisions of Articles III and IV of the By-laws. NASD Rule 0120(i).
4. The NASD defines a "person associated with a member" as being every
sole proprietor, general or limited partner, officer, director or branch manager
of any member, or any natural person occupying a similar status or performing
similar functions, or any natural person engaged in the investment banking or
securities business who is directly or indirectly controlling or controlled by
such member (for example, any employee), whether or not any such person is
registered or exempt from registration with the NASD. Thus, "person associated
with a member" includes a sole proprietor, general or limited partner, officer,
director or branch manager of an organization of any kind (whether a
corporation, partnership or other business entity) which itself is a "member" or
a "person associated with a member". In addition, an organization of any kind is
a "person associated with a member" if its sole proprietor or any one of its
general or limited partners, officers, directors or branch managers is a
"member" or "person associated with a member". (Article I of the NASD By-Laws.)
5. The NASD defines "affiliate" to include a company which controls, is
controlled by or is under common control with a member. A company is presumed to
control a member if the company beneficially owns 10 percent or more of the
outstanding voting securities of a member which is a corporation, or
beneficially owns a partnership interest in 10 percent or more of the
distributable profits or losses of a member which is a partnership. A company is
presumed to be controlled by a member if the member and persons associated with
the member beneficially own 10 percent or more of the outstanding voting
securities of a company which is a corporation, or beneficially own a
partnership interest in 10 percent or more of the distributable profits or
losses of a company which is a partnership. A company is presumed to be under
common control with a member if (i) the same natural person or company controls
both the member and company by beneficially owning 10 percent or more of the
outstanding voting securities of a member or company which is a corporation, or
by beneficially owning a partnership interest in 10 percent or more of the
distributable profits or losses of a member or company which is a partnership or
(ii) a person having the power to direct or cause the direction of the
management or policies of the member or the company also has the power to direct
or cause the direction of the management or policies of the other entity in
question. NASD Rule 2720(b)(1).
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