-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MDkkPkzCurLNH69hEvEez9VuyDri5rt5H1rq7NP8ab2g5hlae8rzuRtZHmExlbtP HgahbPxx9lKiWGMIYCDGxg== 0000902664-09-003776.txt : 20091104 0000902664-09-003776.hdr.sgml : 20091104 20091104165352 ACCESSION NUMBER: 0000902664-09-003776 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20091104 DATE AS OF CHANGE: 20091104 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KANA SOFTWARE INC CENTRAL INDEX KEY: 0001089907 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770435679 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-56923 FILM NUMBER: 091158341 BUSINESS ADDRESS: STREET 1: 181 CONSTITUTION DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 BUSINESS PHONE: 6506148300 MAIL ADDRESS: STREET 1: 181 CONSTITUTION DRIVE CITY: MENLO PARK STATE: CA ZIP: 94025 FORMER COMPANY: FORMER CONFORMED NAME: KANA COMMUNICATIONS INC DATE OF NAME CHANGE: 19990702 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: CARLSON CAPITAL L P CENTRAL INDEX KEY: 0001056973 IRS NUMBER: 752494317 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2100 MCKINNEY AVE STREET 2: STE 1600 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2149329600 MAIL ADDRESS: STREET 1: 2100 MCKINNEY AVE STREET 2: STE 1600 CITY: DALLAS STATE: TX ZIP: 75201 SC 13D 1 p09-1886sc13d.txt KANA SOFTWARE, INC. UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO.)* Kana Software, Inc. --------------------------------------------------- (Name of Issuer) Common Stock, par value $0.001 per share --------------------------------------------------- (Title of Class of Securities) 483600300 --------------------------------------------------- (CUSIP Number) Steven J. Pully, Esq. Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Dallas, TX 75201 (214) 932-9600 --------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 26, 2009 --------------------------------------------------- (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. [x] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 13 Pages) * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 2 OF 13 PAGES - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS Double Black Diamond Offshore Ltd. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 10,954,921 ------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY -0- ------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 10,954,921 ------------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 10,954,921 - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 26.6% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 3 OF 13 PAGES - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS Black Diamond Offshore Ltd. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 694,179 ------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY -0- ------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 694,179 ------------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 694,179 - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.7% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 4 OF 13 PAGES - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS Carlson Capital, L.P. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 11,649,100 ------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY -0- ------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 11,649,100 ------------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,649,100 - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.3% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN, IA - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 5 OF 13 PAGES - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS Asgard Investment Corp. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 11,649,100 ------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY -0- ------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 11,649,100 ------------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,649,100 - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.3% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 6 OF 13 PAGES - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS Clint D. Carlson - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION U.S. Citizen - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 11,649,100 ------------------------------------------------------------- SHARES 8 SHARED VOTING POWER BENEFICIALLY OWNED BY -0- ------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 11,649,100 ------------------------------------------------------------- WITH 10 SHARED DISPOSITIVE POWER -0- - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,649,100 - -------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 28.3% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) IN - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 7 OF 13 PAGES - -------------------------------------------------------------------------------- Item 1. Security and Issuer. This statement on Schedule 13D relates to the shares ("Shares") of common stock, par value $0.001 per share, of Kana Software, Inc. (the "Issuer"). The principal executive office of the Issuer is located at 181 Constitution Drive, Menlo Park, Carlifornia 94025. Item 2. Identity and Background. (a) This statement is filed by: (i) Double Black Diamond Offshore Ltd., a Cayman Islands exempted company ("Double Offshore Ltd."), (ii) Black Diamond Offshore Ltd., a Cayman Islands exempted company ("Offshore Ltd.", and together with Double Offshore Ltd., "the Funds"), (iii) Carlson Capital, L.P., a Delaware limited partnership ("Carlson Capital"), (iv) Asgard Investment Corp., a Delaware corporation and the general partner of Carlson Capital, ("Asgard"), and (v) Mr. Clint D. Carlson, President of Asgard and of Carlson Capital (collectively, the "Reporting Persons"). The name, citizenship, present principal occupation or employment and business address of each director and executive officer of Asgard are set forth in Appendix B attached hereto. (b) The principal business address of each Reporting Person is 2100 McKinney Avenue, Suite 1600, Dallas, TX. (c) The principal business of the Funds is to invest in securities. The principal business of Carlson Capital is serving as the investment manager to the Funds and to a managed account (the "Account"). The principal business of Asgard is serving as the general partner of Carlson Capital. (d) None of the Reporting Persons or persons listed on Appendix B has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Persons or persons listed on Appendix B has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Carlson is a citizen of the United States. Item 3. Source and Amount of Funds or Other Consideration. As of November 4, 2009, the Reporting Persons have spent an aggregate of approximately $10,140,670 to acquire the Shares reported herein, representing approximately (i) $2,674,685, including commissions, to acquire the 2,588,943 Shares purchased by the Reporting Persons other than pursuant to the purchases described in Item 4 and Item 6, (ii) $4,279,360 to acquire the 5,705,814 Shares acquired from NightWatch (as defined below), and (iii) $3,186,625 to acquire the 3,354,343 Shares acquired from KVO (as defined below). As described in Item 6, the Reporting Persons expect to spend additional amounts to complete the purchases of Shares from NightWatch and KVO. The source of funds used to make the purchases reported herein is the working capital of the Reporting Persons, and no part of the purchase amount consists of borrowed funds. - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 8 OF 13 PAGES - -------------------------------------------------------------------------------- ITEM 4. PURPOSE OF TRANSACTION On October 26, 2008, the Funds entered into Stock Purchase Agreements to purchase an aggregate of 9,060,157 Shares, or approximately 22% of the Issuer's outstanding Shares, from two purchasers: NightWatch Capital Partners II, L.P. ("NightWatch") and KVO Capital Management, LLC ("KVO"). The Funds also entered into a Voting Agreement and Irrevocable Proxy, dated October 26, 2009, pursuant to which the Reporting Persons agreed to vote in favor of a sale of substantially all of the Issuer's assets (the "Asset Sale") to Kay Technology Corp, Inc. ("Kay Technology") and the taking of certain related actions, and in connection with the Voting Agreement granted an irrevocable proxy to vote up to 22% of the outstanding Shares to the President of Kay Technology or its designee. The board of directors of the Issuer granted the Funds a limited exemption from the Issuer's Amended and Restated Rights Agreement, dated as of January 13, 2009 (the "Issuer Rights Agreement"), to permit the purchase of the Shares under the Stock Purchase Agreements and to purchase an additional limited amount of Shares, without triggering the Issuer Rights Agreement. The Stock Purchase Agreements, the Voting Agreement, and the Irrevocable Proxy are described in Item 6 hereof, and such description is incorporated by reference into this Item 4. The Reporting Persons acquired the Shares for investment purposes and to acquire a significant interest in a public company that the Reporting Persons expect, following the consummation of the Asset Sale, will acquire one or more suitable businesses in the future. Additionally, the Reporting Persons expect to seek the election or appointment of one or more representatives to the Issuer's board of directors, and whether or not such representatives are elected or appointed, to encourage the Issuer to pursue a strategic plan to enhance shareholder value through the acquisition of one or more suitable businesses. The Reporting Persons may purchase additional Shares, although the Reporting Persons are currently subject to certain limitations contained in the limited exemption to the Issuer Rights Agreement described above and in Item 6 of this Schedule 13D. The Reporting Persons reserve the right to take any and all actions they deem appropriate with respect to their investment, including, without limitation, making recommendations to the Issuer or other stockholders that supplement or differ from the recommendations set forth above, including recommendations concerning the strategy, capitalization or operation of the Issuer, communicating with other stockholders, conducting consent or other solicitations under the proxy rules, selling some or all of their Shares, engaging in short selling of, or any hedging or similar transactions with respect to, Shares, or changing their intention with respect to any and all matters referred to in this Item 4. Except as set forth herein, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 9 OF 13 PAGES - -------------------------------------------------------------------------------- ITEM 5. INTEREST IN SECURITIES OF THE ISSUER (a) As of the close of business on November 4, 2009, the Reporting Persons beneficially owned an aggregate of 11,649,100 Shares, constituting approximately 28.3% of the Shares outstanding. The aggregate percentage of Shares beneficially owned by the Reporting Persons is based upon 41,214,666 Shares outstanding, which is the total number of Shares issued and outstanding as of July 31, 2009 as reported in the Issuer's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2009. (b) Carlson Capital, Asgard and Mr. Carlson have the power to vote and direct the disposition of (i) the 649,179 Shares reported herein as owned by Offshore Ltd., and (ii) the 10,954,921 Shares reported herein as owned by Double Offshore Ltd. (c) Information concerning transactions in the Shares effected by the Reporting Persons during the past sixty (60) days is set forth in Appendix A hereto and is incorporated herein by reference. (d) No person other than the Reporting Persons is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER The Funds are party to (i) a Stock Purchase Agreement, dated October 26, 2009 (the "NightWatch Stock Purchase Agreement"), pursuant to which the Funds have agreed to purchase 5,705,814 Shares from NightWatch, subject to customary closing conditions, and (ii) a Stock Purchase Agreement, dated October 26, 2009 (the "KVO Stock Purchase Agreement"), pursuant to which the Funds have agreed to purchase 3,354,343 Shares from KVO, subject to customary closing conditions, in each case on the date that is two business days following the announcement of the execution of the Asset Purchase Agreement, dated October 26, 2009 (the "Kana APA"), between the Issuer and Kay Technology Corp, Inc. ("Kay Technology"), or such other date as may be mutually agreed upon by the parties. The purchase of Shares from KVO closed on October 26, 2009 and the purchase of Shares from NightWatch closed on October 29, 2009. The consideration payable for the Shares purchased pursuant to the NightWatch Stock Purchase Agreement is equal to the sum of (a) $0.75 per Share, payable at closing, (b) in the event that the transactions contemplated by the Kana APA are consummated, the net cash per Share, as adjusted, and (c) within 160 days after the closing of the Kana SPA, the additional amount of net cash per Share, if any, representing the favorable resolution of certain escrow agreements entered into in connection with the Kana APA. The consideration for the Shares purchased pursuant to the KVO Stock Purchase Agreement is equal to (a) $0.95 per Share, payable at closing, and (b) an additional $0.10 per Share (the "Remaining Purchase Price") to be paid to KVO in the event that, within nine months of the date of execution of the Kana APA, the Issuer consummates the sale of all or substantially all of its assets, or is otherwise acquired by virtue of the merger or consolidation of the Issuer or the tender offer for a majority of the Issuer's outstanding Shares, which Remaining Purchase Price is automatically increased to $0.15 per Share in the event that KVO does not receive payment of such Remaining Purchase Price within five business days following the consummation of such transaction by the Issuer. This description of the NightWatch Stock Purchase Agreement and the KVO Stock Purchase Agreement is summary only and is qualified by reference to the full text of the NightWatch Stock Purchase Agreement and the KVO Stock Purchase Agreement, copies of which are attached hereto as Exhibit 2 and Exhibit 3 and are incorporated herein by reference. In addition, the Funds and Carlson have entered into a Voting Agreement and Irrevocable Proxy, dated October 26, 2009 (the "Voting Agreement") with Kay Technology, in connection with which the Funds have granted an Irrevocable Proxy (the "Irrevocable Proxy") over Shares beneficially owned by them, subject to a maximum, to the President or any other designee of Kay Technology. Pursuant to the Voting Agreement, the Funds and Carlson have agreed to vote the Shares beneficially owned by the Funds as of the date of the Voting Agreement (up to an amount that represents, in the aggregate, a maximum of 22% of the outstanding Shares), unless otherwise instructed by Kay Technology and to the extent not otherwise voted pursuant to the Irrevocable Proxy, at every annual, special or adjourned meeting of the stockholders of the Issuer and in every written consent in lieu of such meeting, (i) in favor of approval of the adoption of the Kana APA (or any amended version thereof) and the transactions contemplated thereby, (ii) in favor of the name change contemplated by the Kana APA, (iii) in favor of any proposal to adjourn the meeting to solicit additional proxies in favor of the approval of the Kana APA, and (iv) against any acquisition proposal (including any superior proposal) or any other corporate action which would frustrate the purpose of or delay the consummation of the transactions contemplated by the Kana APA. The Funds have also agreed not to transfer any Shares beneficially owned by them (other than to affiliates of the Funds) until the expiration of the Voting Agreement. The Irrevocable Proxy and the obligations of the Funds under the Voting Agreement terminate automatically upon the earlier of (i) the closing date under the Kana APA, (ii) the termination of the Kana APA (A) by mutual written consent of Kay Technology and the Issuer, (B) by either Kay Technology or the Issuer if the transactions contemplated by the Kana APA are permanently enjoined, (C) by Kay Technology upon a breach of any representation, warranty, covenant or agreement of the Issuer, or (D) by the Issuer upon a breach of any representation, warranty, covenant or agreement of Kay Technology, (iii) the six month anniversary of the termination of the Kana APA by either Kay Technology or the Issuer if the transactions contemplated by the Kana APA have not been consummated by February 15, 2010, (iv) the nine month anniversary of the termination of the Kana APA (A) by either Kay Technology or the Issuer if the Kana APA is not approved by the Issuer's stockholders, (B) by Kay Technology if the Issuer adopts or recommends any acquisition proposal or enters into an alternative acquisition agreement or if the Issuer's board of directors changes its recommendation of the transaction, (C) by Kay Technology if the Issuer breaches its obligations to file its proxy statement with the SEC, hold the stockholders meeting and solicit proxies from its stockholders in favor of the adoption of the Kana APA, and (D) by the Issuer at any time prior to obtaining stockholder approval, if the Issuer's board of directors authorizes the Issuer to enter into an alternative acquisition agreement with respect to a superior proposal, and (v) such date and time designated in writing by Kay Technology. This description of the Voting Agreement and the Irrevocable Proxy is summary only and is qualified by reference to the full text of the Voting Agreement and the Irrevocable Proxy, a copy of which is attached hereto as Exhibit 4 and is incorporated herein by reference. The board of directors of the Issuer has granted the Funds a limited exemption from the Issuer Rights Agreement, to permit the acquisition of (i) an aggregate of 9,060,157 Shares from Night-Watch and KVO, and (ii) an additional 3,098,169 Shares, in each case without triggering the provisions of the Issuer Rights Agreement. Except as set forth herein, there are no contracts, understandings or relationships among the persons named in Item 2 or between such persons and any other person with respect to the Shares. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 1. Joint Filing Agreement, dated November 4, 2009. Exhibit 2. NightWatch Stock Purchase Agreement Exhibit 3. KVO Stock Purchase Agreement Exhibit 4. Voting Agreement and Irrevocable Proxy - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 10 OF 13 PAGES - -------------------------------------------------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: November 4, 2009 BLACK DIAMOND OFFSHORE LTD. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson -------------------------------- Name: Clint D. Carlson Title: President DOUBLE BLACK DIAMOND OFFSHORE LTD. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson -------------------------------- Name: Clint D. Carlson Title: President CARLSON CAPITAL, L.P. By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson -------------------------------- Name: Clint D. Carlson Title: President - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 11 OF 13 PAGES - -------------------------------------------------------------------------------- ASGARD INVESTMENT CORP. By: /s/ Clint D. Carlson ------------------------------- Name: Clint D. Carlson Title: President /s/ Clint D. Carlson ---------------------------------- Clint D. Carlson - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 12 OF 13 PAGES - -------------------------------------------------------------------------------- APPENDIX A TRANSACTIONS IN THE ISSUER'S SHARES OF COMMON STOCK BY THE REPORTING PERSONS IN THE PAST SIXTY (60) DAYS The following tables set forth all transactions in the Shares of the Issuer effected in the past sixty (60) days by each of the Reporting Persons, as applicable. Unless otherwise noted, all such transactions were effected in private transactions. Double Black Diamond Offshore Ltd. Trade Date Amount Purchased (Sold) Price per Share ($) ---------- ----------------------- ------------------- 10/26/2009 5,364,031 $ 0.75 (1) 10/26/2009 3,153,082 0.95 (1) 10/28/2009 975,133 0.75 (2) Black Diamond Offshore Ltd. Trade Date Amount Purchased (Sold) Price per Share ($) ---------- ----------------------- ------------------- 10/26/2009 341,783 $ 0.75 (1) 10/26/2009 201,261 0.95 (1) 10/28/2009 58,290 0.75 (2) (1) Represents the purchase price per Share paid on the closing date of the relevant Stock Purchase Agreement, as described in Item 6. As described in Item 6, the Reporting Persons expect to spend additional amounts to complete the purchase of the Shares reported herein. (2) Open market purchase. - -------------------------------------------------------------------------------- CUSIP NO. 483600300 SCHEDULE 13D PAGE 13 OF 13 PAGES - -------------------------------------------------------------------------------- APPENDIX B DIRECTORS AND EXECUTIVE OFFICERS OF ASGARD The following sets forth the name, position, and principal occupation of each director and executive officer of Asgard Investment Corp. Except as otherwise indicated, the business address of each director and officer is 2100 McKinney Avenue, Suite 1600, Dallas, TX. To the best of the Reporting Persons' knowledge, except as set forth in this Schedule 13D, none of the directors or executive officers of Asgard Investment Corp. owns any Shares. Asgard Investment Corp. Name Position Principal Occupation Citizenship - ---- -------- -------------------- ----------- Clint Carlson Director/President Investment Manager United States Nancy Carlson Secretary/Treasurer Executive United States EXHIBIT 1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the undersigned agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including any and all amendments thereto) with respect to securities of Kana Software, Inc., and further agree that this Joint Filing Agreement shall be included as an Exhibit to such joint filings. The undersigned further agree that each party hereto is responsible for the timely filing of such Statement on Schedule 13D and any amendments thereto, and for the accuracy and completeness of the information concerning such party contained therein; provided, however, that no party is responsible for the accuracy or completeness of the information concerning any other party, unless such party knows or has reason to believe that such information is inaccurate. This Joint Filing Agreement may be signed in counterparts with the same effect as if the signature on each counterpart were upon the same instrument. IN WITNESS WHEREOF, the undersigned have executed this Agreement as of November 4, 2009. BLACK DIAMOND OFFSHORE LTD. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson ------------------------------ Name: Clint D. Carlson Title: President DOUBLE BLACK DIAMOND OFFSHORE LTD. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson ------------------------------ Name: Clint D. Carlson Title: President CARLSON CAPITAL, L.P. By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson ------------------------------ Name: Clint D. Carlson Title: President ASGARD INVESTMENT CORP. By: /s/ Clint D. Carlson ------------------------------- Name: Clint D. Carlson Title: President /s/ Clint D. Carlson ----------------------------------- Clint D. Carlson EX-99 2 p09-1886exhibit2.txt EXHIBIT 2--NIGHT-WATCH STOCK PURCHASE AGREEMENT EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made as of the 26th day of October, 2009, by and between Night-Watch Capital Partners II, LP (the "SELLER"), a limited liability company organized under the laws of Delaware, and Double Black Diamond Offshore Ltd., a Cayman Islands exempted company, and Black Diamond Offshore Ltd., a Cayman Islands exempted company (collectively, the "PURCHASER"). WHEREAS, The Seller desires to sell to Purchaser, and Purchaser desires to purchase and accept from the Seller, all of the shares of common stock of Kana Software, Inc. ("KANA" or the "COMPANY"), a Delaware corporation, owned by the Seller (collectively, the "PURCHASED SHARES") on the terms and subject to the conditions of this Agreement; and WHEREAS, each of the Purchaser and the Seller desires that the foregoing transaction be completed on such terms and subject to such conditions and wish to make certain representations, warranties and covenants in connection therewith. NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Seller and the Purchaser agree as follows: 1. PURCHASE AND SALE OF PURCHASED SHARES. 1.1 AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as defined in Section 1.3), the Seller will, on the terms and subject to the terms of this Agreement, sell, assign, transfer and deliver to the Purchaser, and the Purchaser will purchase and accept from the Seller, the Purchased Shares (as set forth on the signature page hereto) against payment of the Purchase Price (as defined in Section 1.2). All certificates representing the Purchased Shares being sold by the Seller will be duly endorsed by such Seller (or accompanied by duly executed stock transfer powers executed in favor of the Purchaser), with all necessary transfer tax stamps acquired at the Seller's expense affixed. 1.2 PURCHASE PRICE. Purchaser will pay to the Seller the purchase price (the "PURCHASE PRICE") per share for the Purchased Shares to be purchased and sold pursuant to this Agreement, calculated and paid as follows: (a) At the Closing (as defined in Section 1.3(a)), $0.75 per Purchased Share (the "INITIAL PURCHASE PRICE"); and (b) In the event that the transactions contemplated by the Kana APA (as defined in Section 1.3(a)) are consummated, within two Business Days following such consummation (as defined in Section 1.3(a)), the amount per purchased share calculated by taking the net cash per share as of the closing of the KANA APA ( the "CLOSING CASH PER SHARE")(for purposes of this sentence, any payables or other liabilities shall be deducted from cash except to the extent already considered by 1.2 (c) below), less $.79 per share (the "CLOSING PURCHASE PRICE"), plus (c) within 160 days after the closing of the KANA APA, the additional amount of net cash per share of the Company representing the favorable resolution of all Kana APA escrow agreements after the closing of the Kana APA, if any, measured 150 days after the closing of the Kana APA (the "TOTAL PURCHASE PRICE"). 1.3 CLOSING. (a) The closing (the "CLOSING") of the purchase and sale of the Purchased Shares shall take place at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, within two Business Days following the announcement of the execution of the Asset Purchase Agreement, by and among Kay Technology Corp, Inc. and Kana, dated as of October 26, 2009 (the "KANA APA"), or at such other time and place as the Seller and the Purchaser mutually agree upon orally or in writing (such date the "CLOSING DATE"). For purposes of this Agreement, "Business Day" means any day other than Saturday, Sunday or any other day on which commercial banks in New York City are authorized or required by Law (as defined in Section 2.4(b)) to remain closed. (b) The Seller shall deliver to the Purchaser: (i) no later than two Business Days prior to the Closing, wire transfer instructions, in writing, designating the Seller's account(s) to which the Purchaser shall deliver the Initial Purchase Price at Closing in accordance with the terms and conditions of this Agreement; and (ii) at or prior to the Closing, a certificate or certificates representing the Purchased Shares that the Purchaser is purchasing at such Closing, duly endorsed by the Seller (or accompanied by duly executed stock transfer powers executed in favor of the Purchaser), with all necessary transfer tax stamps acquired at the Seller's expense affixed. (c) At or prior to the Closing, the Purchaser shall deliver to the Seller a wire transfer of immediately available funds to an account or accounts designated by the Seller, in the aggregate amount equal to the Initial Purchase Price. 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. As a material inducement to the Purchaser to enter into this Agreement and purchase the Purchased Shares hereunder, the Seller hereby represents and warrants to the Purchaser as of the date hereof and as of the Closing Date that: 2.1 ORGANIZATION, EXECUTION AND EFFECT OF AGREEMENT. (a) The Seller is a limited liability company that (A) is duly organized, validly existing and in good standing under the Laws (as defined herein) of its jurisdiction of formation, (B) is duly qualified or licensed to do business and is in good standing as a foreign limited liability company in each jurisdiction in which the character of the properties owned or leased by it or the nature of its business makes such qualification necessary, except for such of the foregoing in which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of Seller to enter into this Agreement or the Transaction Documents or consummate the transactions contemplated hereby or thereby, (C) has the requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform 2 the transactions contemplated hereby and thereby to be performed by it, and (D) has duly taken all necessary action required to be taken under applicable Law for the due authorization of the execution and delivery by the Seller of this Agreement and the Transaction Documents to which it is a party and the performance by it of the transactions contemplated hereby or thereby. (b) This Agreement has been, and the Transaction Documents to which the Seller is a party will be, duly and validly executed and delivered by such Seller and, assuming the due execution and delivery of this Agreement by Purchaser, and assuming the due execution and delivery of the Transaction Documents by any other parties thereto, constitutes a legal, valid and binding obligation of the Seller, enforceable against such Seller in accordance with their terms. 2.2 OWNERSHIP. The Seller is the true and lawful owner of record, and has the sole voting power and sole dispositive power over, the Purchased Shares. The Purchased Shares represent all of the shares of common stock of the Company and other securities convertible for or exchangeable into common stock of the Company owned by the Seller and its Affiliates (as defined in Section 11.2). The delivery of the certificates representing the Purchased Shares being sold by the Seller will transfer to Purchaser good and valid title to such Purchased Shares, free of any liens, security interests or other encumbrances, claims or voting or other restrictions (collectively, "LIENS") of any kind adverse to the Purchaser, other than any restrictions on resale of the Shares as may be imposed under applicable securities laws of the U.S. and any state thereof. 2.3 NO OPTIONS. There are no outstanding subscriptions, options, rights (including phantom stock rights), warrants, calls, commitments, understandings, arrangements, plans or other agreements of any kind affecting the Seller's Purchased Shares. 2.4 NO RESTRICTIONS. (a) There is no suit, action, claim, investigation or inquiry by any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentally of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision ("GOVERNMENTAL AUTHORITY"), and no legal, administrative or arbitration proceeding pending or, to the Seller's knowledge, threatened against the Seller or any of its Purchased Shares, with respect to the execution, delivery and performance of this Agreement or any Transaction Documents or the transactions contemplated hereby or thereby or any other agreement entered into by such Seller in connection with the transactions contemplated hereby or thereby. (b) The execution and delivery by Seller of this Agreement and the Transaction Documents to which it is a party do not, and the performance by the Seller of the transactions contemplated hereby and thereby to be performed by it will not, conflict with, or result in any material violation of, or constitute a material default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligations or the loss of a material benefit or the incurrence of a material liability under, (i) any provision of the certificate of incorporation or bylaws or comparable governing documents of the Company, any of its subsidiaries or the Seller, if applicable, or (ii) to the knowledge of Seller, any material permit or approval ("PERMIT"), if any, issued to the Company, any of its subsidiaries or the Seller, under any statute, law, rule, regulation or ordinance 3 (collectively, "LAWS") or any judgment, decree, order, writ, permit or license (collectively, "Orders") relating to the Company, any of its subsidiaries or such Seller, except, in the case of such of the foregoing as applicable to the Company or any of its subsidiaries, but not the Seller, for those as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the business, financial condition, results of operations or prospects of the business of the Company. (c) The execution, delivery and performance by the Seller of its obligations under this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby will not (i) result in the violation by the Seller or, to the knowledge of the Seller, by the Company of any Law or Order applicable only to it or any of its Purchased Shares or (ii) conflict with, result in any violation or breach of, constitute (with or without notice or lapse of time or both), a default under or require the Seller or, to the knowledge of Seller, require the Company to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or give to any Person (as defined in Section 11.2) any right of payment or reimbursement, termination, cancellation, modification or acceleration, or result in the creation or imposition of any Lien upon the Seller's Purchased Shares, under any of, the terms conditions or provisions of any agreement, commitment, lese, license, evidence of indebtedness, mortgage, indenture, security agreement, instrument, note, bond, franchise, permit, concession or other instrument, obligation or agreement of any kind (collectively, "CONTRACTS") to which the Seller is a party or by which such Seller or any of its assets or properties are bound, except in the case of any of the foregoing as applicable to the Company or any of its subsidiaries, but not the Seller, for such of the foregoing as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the business, financial condition, results of operations or prospects of the business of the Company. 2.5 APPROVALS AND CONSENTS. No material consent, approval or action of, filing with or notice to any Governmental Authority or Person is necessary or required under any of the terms, conditions or provisions of any Law or Order or any Contract to which the Seller is a party or its Purchased Shares are bound for the execution and delivery of this Agreement and any Transaction Documents by the Seller, the performance by the Seller of its obligations hereunder or thereunder or the consummation by the Seller of the transactions contemplated hereby or thereby. 2.6 CONTRACTS. The Seller is not party to any Contract with, and does not have any claim or right against the Company or any of its subsidiaries. 2.4 BROKERS' FEES. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Purchaser could become liable or obligated. 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser hereby represents, warrants and covenants as of the date hereof and as of the Closing Date that: 3.1 ORGANIZATION, AUTHORIZATION AND EFFECT OF AGREEMENT. (a) The Purchaser is an exempted company that (A) is duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or formation, (B) is duly qualified or 4 licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of its business makes such qualification necessary, except for such of the foregoing in which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement, the Transaction Documents or to consummate the transactions contemplated hereby or thereby, (C) has the requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform the transactions contemplated hereby and thereby to be performed by it, and (D) has duly taken all necessary action required to be taken under applicable Law for the due authorization of the execution and delivery by the Purchaser of this Agreement and the Transaction Documents to which it is a party and the performance by it of the transactions contemplated hereby or thereby. (b) This Agreement has been, and the Transaction Documents to which the Purchaser is a party will be, duly and validly executed and delivered by such Purchaser and, assuming the due execution and delivery of this Agreement by Seller, and assuming the due execution and delivery of the Transaction Documents by any other parties thereto, constitutes a legal, valid and binding obligation of the Purchaser, enforceable against such Purchaser in accordance with their terms. 3.2 NO RESTRICTIONS. (a) There is no suit, action, claim, investigation or inquiry by any Governmental Authority, and no legal, administrative or arbitration proceeding pending or, to the Purchaser's knowledge, threatened against the Purchaser, with respect to the execution, delivery and performance of this Agreement or any Transaction Document or the transactions contemplated hereby or thereby or any other agreement entered into by such Purchaser in connection with the transactions contemplated hereby or thereby. (b) The execution and delivery by Purchaser of this Agreement and the Transaction Documents to which it is a party do not, and the performance by the Purchaser of the transactions contemplated hereby and thereby to be performed by it will not, conflict with, or result in any material violation of, or constitute a material default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligations or the loss of a material benefit or the incurrence of a material liability under, (i) any provision of the certificate of incorporation or bylaws or comparable governing documents of the Purchaser, or (ii) to the knowledge of Purchaser, any material Permit, if any, issued to the Purchaser under any Laws or any Orders relating to such Purchaser, in each case except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. (c) The execution, delivery and performance by the Purchaser of its obligations under this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby will not (i) result in the violation by the Purchaser of any Law or Order applicable only to it or (ii) conflict with, result in any violation or breach of, constitute (with or without notice or lapse of time or both), a default under or require the Purchaser to obtain any consent, approval or action of, make any filing with 5 or give any notice to, or result in or give to, any Person any right of payment or reimbursement, termination, cancellation, modification or acceleration under any of, the terms, conditions or provisions of any Contracts to which the Purchaser is a party or by which such Purchaser or any of its assets or properties are bound, in each case except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. 3.3 APPROVALS AND CONSENTS. No consent, approval or action of, filing with or notice to any Governmental Authority or Person is necessary or required under any of the terms, conditions or provisions of any Law or Order or any Contract to which the Purchaser is a party for the execution and delivery of this Agreement and any Transaction Documents by the Purchaser, the performance by the Purchaser of its obligations hereunder or thereunder or the consummation by the Purchaser of the transactions contemplated hereby or thereby except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. 3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchased Shares to be received by the Purchaser will be acquired by the Purchaser for investment purposes only, and not with a view to the resale of any part thereof, and that the Purchaser has no present intention of selling or granting any participation in the same. By executing this Agreement, the Purchaser further represents that it does not have any Contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participations to such person or entity or to any third person or entity, with respect to any of the Purchased Shares. The Purchaser acknowledges and agrees that it is acquiring the Purchased Shares subject to certain restrictions on resale that are imposed under applicable U.S. and state securities laws. 3.5 BROKERS' FEES. The Purchaser has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Seller could become liable or obligated. 4. AGREEMENTS WITH RESPECT TO MATERIAL NON-PUBLIC INFORMATION. 4.1 Each of the Purchaser and the Seller is sophisticated with respect to transactions in the Purchased Shares and has adequate information concerning the business and financial condition of the issuer of the Purchased Shares to make an informed decision regarding the purchase and sale contemplated hereby and has independently and without reliance upon the other and based on such information as it has deemed appropriate in its independent judgment made its own analysis and decision to enter into the transaction. 4.2 Each party hereto has executed a confidentiality agreement with the Company and hereby acknowledges that the other party and its representatives may have received and may possess material non-public information ("NON-PUBLIC INFORMATION") regarding the Purchased Shares, the issuer of the Purchased Shares or its other outstanding debt or securities that may not have been provided to the other party, including, without limitation, information received on a confidential basis directly or indirectly from the issuer, and that each 6 party is precluded from disclosing such information to the other. Such Non-public Information may be indicative of a value of the Purchased Shares that is substantially more than the Total Purchase Price reflected in the transaction contemplated hereby or otherwise adverse to either party's interest, and, therefore, such information might be material to the Seller's decision to sell the Purchased Shares or the Purchaser's decision to purchase the Purchased Shares. Each of the Purchaser and Seller acknowledges that it has not requested and does not wish to receive Non-public Information from the other party and agrees that neither party shall have any liability to the other with respect to the non-disclosure of Non-public Information. 4.3 Each of Purchaser and Seller expressly releases the other, its Affiliates and their respective officers, directors, employees, agents and controlling persons from any and all liabilities arising from their respective failure to disclose or review, such Non-public Information, and each of Purchaser and Seller agrees to make no claim against the other, its Affiliates and their respective officers, directors, employees, shareholders, partners, agents, representatives or Affiliates with respect to the transaction, relating to such failure to disclose, or to review Non-public Information. 4.4 Purchaser and Seller are relying on the other's representations in engaging in the transaction contemplated hereby, and would not engage in such transaction in the absence of such representations. 4.5 This Section 4 represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof as to disclosure or non-disclosure of the Non-public Information, and supersedes any prior or contemporaneous agreements relating thereto. 5. COVENANTS 5.1 Each of Purchaser and Seller shall, (i) subject to the satisfaction of the conditions to such party's obligations set forth in Sections 6, 7, and 8, execute and deliver such other documents, certificates, agreements and other writings and (ii) take such other actions, in each case, as may be necessary or reasonably requested by the other in order to consummate or implement expeditiously the transactions contemplated hereby in accordance with the terms of this Agreement. 5.2 Each of Purchaser and Seller shall use its reasonable best efforts to cause all conditions precedent to the obligations of Purchaser and the Sellers to be satisfied. Upon the terms and subject to the conditions of this Agreement, each of Purchaser and Seller will use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the transactions contemplated hereby. 5.3 For a period of six months following the Closing Date, the Seller shall not, and shall cause its Affiliates, directors, officers, and employees not to, directly or indirectly, acting alone or in concert with others, acquire, sell or otherwise transfer ownership of (including "beneficial ownership" as defined in Rule 13d-3 under the Securities Exchange Act of 7 1934, as amended) any securities or indebtedness of, or any economic interest in, the Company or any of its subsidiaries (including any participation interest therein or any assets underlying such securities or indebtedness). 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER AND THE SELLER. The obligations of each of Purchaser and each the Seller under this Agreement to consummate the transactions contemplated hereby will be subject to the satisfaction, at or prior to the Closing, of the following conditions: 6.1 RESTRAINING ACTION. There shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligations of Purchaser under this Agreement to consummate the transactions contemplated hereby will be subject to the satisfaction, at or prior to the Closing, of all of the following conditions, any one or more of which may be waived at the option of Purchaser: 7.1 NO MATERIAL MISREPRESENTATION OR BREACH. (a) There shall have been no material breach by the Seller in the performance of any of the covenants herein to be performed by him, her or it in whole or in part prior to the Closing, and (b) the representations and warranties of the Seller contained in this Agreement (i) that are not qualified as to materiality or material adverse effect shall be true and correct in all material respects and (ii) that are so qualified shall be true and correct, in each case on the date hereof and as of the Closing Date as if made anew on the Closing Date, except for representations or warranties made as of a specified date, which shall be true and correct in all material respects as of the specified date. 7.2 CLOSING DELIVERABLES. The Purchaser shall have received the closing deliverables described in Section 1.3(b). 8. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. The obligations of the Seller under this Agreement to consummate the transactions contemplated hereby will be subject to the satisfaction, at or prior to the Closing, of all the following conditions, any one or more of which may be waived by the Seller at its option: 8.1 NO MATERIAL MISREPRESENTATION OR BREACH. (a) There shall have been no material breach by Purchaser in the performance of any of the covenants herein to be performed by it in whole or in part prior to the Closing, and (b) the representations and warranties of Purchaser contained in this Agreement (i) that are not qualified as to materiality or material adverse effect shall be true and correct in all material respects and (ii) that are so qualified (if any) shall be true and correct, in each case on the date hereof and as of the Closing Date as if made anew on the Closing Date, except for representations or warranties made as of a specified date, which shall be true and correct in all material respects as of the specified date. 8.2 CLOSING DELIVERABLES. The Seller shall have received the closing deliverables described in Section 1.3(c). 8 9. TERMINATION. (a) Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Closing: (i) by the mutual written consent of Purchaser and the Seller; (ii) by either Purchaser or the Seller, if the Closing shall not have occurred on or before October 30, 2009, provided, however, that the right to terminate this Agreement pursuant to this Section 9(a)(ii) will not be available to any party whose breach of any provision of this Agreement results in the failure of the Closing to occur by such time; (iii) by either Purchaser or the Seller if there shall have been entered a final, nonappealable order or injunction of any Governmental Authority restraining or prohibiting the consummation of the transactions contemplated hereby or any material part thereof; (iv) by Purchaser if the Seller shall have (i) failed to perform any obligation or to comply with any agreement or covenant of the Seller under this Agreement or (ii) breached any of its representations or warranties, in each case such that the condition in Section 7.1 would not be satisfied, which failure has not been cured within ten calendar days of notice from Purchaser; or (v) by the Seller if Purchaser shall have (i) failed to perform any obligation or comply with any agreement or covenant of Purchaser under this Agreement or (ii) breached any of its representations or warranties, in each case such that the condition in Section 8.1 would not be satisfied, which failure has not been cured within ten calendar days of notice from the Seller. (b) In the event of the termination of this Agreement under this Section 9, each party hereto will pay all of its own fees and expenses. There will be no further liability hereunder on the part of any party hereto if this Agreement is so terminated, except by reason of a prior breach of any representation, warranty or covenant contained in this Agreement. 10. RELEASE OF CLAIMS. Subject to the occurrence of the Closing, the Seller, its representatives and Affiliates hereby release and forever discharge the Company, its subsidiaries, representatives and Affiliates and the Purchaser, its representatives and Affiliates from any and all actions, causes of action, suits, debts, claims and demands (except for liabilities and obligations arising under this Agreement and the Transaction Documents) that arise out of or relate to acts, events, conditions or omissions occurring or existing at any time prior to and including the Closing Date. 11. MISCELLANEOUS. 11.1 SURVIVAL. The warranties, representations and covenants of the Company and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement. 11.2 SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties (including permitted transferees of any Purchased Shares). Nothing in this Agreement, express or implied, is intended 9 to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. This Agreement may not be assigned by any party without the prior written consent of the other party. Notwithstanding the foregoing, Purchaser may assign this Agreement and any or all rights or obligations hereunder, without the consent of the Seller, to one or more of its Affiliates; PROVIDED that no assignment or attempted assignment shall relieve the assignor of any of its obligations under this Agreement. For purposes of this Agreement, "Affiliate" means any individual, group of individuals or entity, including without limitation, any trust, custodian, individual retirement account, corporation, limited liability company, joint venture, limited partnership or general partnership (each, a "PERSON") that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with a Person, or (ii) any other Person that, directly or indirectly, is the beneficial owner of a majority of any class of equity securities of the specified person or of which the specified Person is directly or indirectly the owner of a majority of any class of equity securities. 11.3 PRESS RELEASES. Purchaser and Seller will consult with the other before issuing, and provide the other the opportunity to review and comment upon, any press release or other public statements with respect to this Agreement, the Transaction Documents or the transactions contemplated hereby or thereby and will not issue any such press release or make any such public statement without the other party's prior written consent, except that a party hereto may make such disclosures as are required by applicable Law, but only after disclosing to the other party the basis for concluding that such disclosure is so required and consulting with the other parties regarding the contents of such disclosure prior thereto. 11.4 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of New York as applied to agreements among New York residents entered into and to be performed entirely within New York. Any judicial proceeding brought with respect to this Agreement must be brought in any court of competent jurisdiction in the State of New York, and, by execution and delivery of this Agreement, each party (i) accepts, generally and unconditionally, the exclusive jurisdiction of such court and any related appellate court, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement and (ii) irrevocably waives any obligation it may now or hereafter have as to the venue of any such suit, action or proceeding brought in such a court or that such court is an inconvenient forum. 11.5 SPECIFIC PERFORMANCE. Each party hereto acknowledges and agrees that one or more of the other parties would be irreparably damaged in the event the provisions of this Agreement are not specifically enforced in the event of a breach hereof by such party and that such damage could not be adequately remedied by the payment of money damages. Consequently, in addition to any other remedies that may be available at law or at equity, each party agrees that upon any breach or threatened breach of this Agreement by such party, one or more of the other parties hereto shall be entitled to temporary and permanent injunctive or other appropriate equitable relief to restrain or otherwise prevent such breach or threatened breach without posting any bond and without proving that monetary damages would be inadequate. 10 11.6 LIMITATION ON DAMAGES. Notwithstanding any other provisions of this Agreement, in no event will any party hereto be liable to any other party for, nor will any party be entitled to claim for, any lost profits or consequential, exemplary, indirect, punitive or special damages or losses with respect to any claim arising out of or related to this Agreement or the transactions contemplated hereby. 11.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 11.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address as specified below or to any other address or addresses as any party may from time to time designate by written notice to the other party; as set forth on the signature page hereof or at such other address as such party may designate by ten days advance written notice to the other parties hereto. If to Purchaser, to: Double Black Diamond Offshore, Ltd. Black Diamond Offshore, Ltd. c/o Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Dallas, Texas 75201 Attention: Steven J. Pully If to Seller, to: NightWatch Capital Advisors, LLC 5314 River Run Drive, Suite 350 Provo, Utah 84604 Attention: John F. Nemelka 11.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Purchaser and Seller. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities and the Seller. 11.10 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement 11 and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall he enforceable in accordance with its terms. 11.11 ENTIRE AGREEMENT. This Agreement and the documents referred to herein Constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. 11.12 COUNTERPARTS. This Agreement may be executed in two or more Counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 12 IN WITNESS WHEREOF, the parties have executed this Agreement as of the above written. Double Black Diamond Offshore Ltd., BY: Carlson Capital, L.P., its investment manager BY: Asgard investment Corp., its general partner (Print Name of Stockholder) By: /s/ Clint D Carlson ------------------------------------------- Name: Clint D Carlson Title: President Double Black Diamond Offshore Ltd., BY: Carlson Capital, L.P., its investment manager BY: Asgard investment Corp., its general partner (Print Name of Stockholder) By: /s/ Clint D Carlson ------------------------------------------- Name: Clint D Carlson Title: President NightWatch Capital Partners II, LP By: /s/ John F. Nemelka ------------------------------------------- John F. Nemelka Title: Managing Principal of NightWatch Capital Management LLC, the General Partner Owner of 5,705,814 Purchased Shares on the date hereof. EX-99 3 p09-1886exhibit3.txt EXHIBIT 3--KVO STOCK PURCHASE AGREEMENT EXECUTION COPY STOCK PURCHASE AGREEMENT THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is made as of the 26th day of October, 2009, by and among KVO Capital Management LLC (the "SELLER"), a limited liability company organized under the laws of Delaware, Black Diamond Offshore Ltd., a Cayman Islands exempted company, Double Black Diamond Offshore Ltd., a Cayman Islands exempted company (together with Black Diamond Offshore Ltd., the "PURCHASERS"), and Carlson Capital, L.P. ("CARLSON"). WHEREAS, The Seller desires to sell to Purchasers, and Purchasers desire to purchase and accept from the Seller, all of the shares of common stock or securities convertible into common stock of Kana Software, Inc. ("KANA" or the "COMPANY"), a Delaware corporation, owned by the Seller (collectively, the "PURCHASED SHARES") on the terms and subject to the conditions of this Agreement; and WHEREAS, each of the Purchasers and the Seller desires that the foregoing transaction be completed on such terms and subject to such conditions and wish to make certain representations, warranties and covenants in connection therewith. NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Seller and the Purchasers agree as follows: 1. PURCHASE AND SALE OF PURCHASED SHARES. 1.1 AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as defined in Section 1.3(a)), the Seller will, on the terms and subject to the terms of this Agreement, sell, assign, transfer and deliver to the Purchasers, and the Purchasers will purchase and accept from the Seller, the Purchased Shares (as set forth on the signature page hereto) against payment of the Total Purchase Price (as defined in Section 1.2). At the Closing, Seller shall deliver all certificates representing the Purchased Shares being sold by the Seller duly endorsed by such Seller (or accompanied by duly executed stock transfer powers executed in favor of the Purchasers), or other evidence of valid transfer of the Purchased Shares to the Purchasers in a form reasonably satisfactory to the Purchasers, as applicable, with all necessary transfer tax stamps affixed (any expense of acquiring such transfer tax stamps to be shared equally between Seller and Purchasers). 1.2 TOTAL PURCHASE PRICE. Purchasers will pay to the Seller the Total Purchase Price (as defined below) per share for the Purchased Shares to be purchased and sold pursuant to this Agreement, calculated and paid as follows: (a) At the Closing (as defined in Section 1.3(a)), $0.95 per Purchased Share (the "INITIAL PURCHASE PRICE"); and (b) In the event that within nine months of the date of execution of the Kana APA (the "KANA CLOSING PERIOD"), Kana consummates the sale of all or substantially of its assets, or is otherwise acquired by virtue of the merger or consolidation of the Company or the tender offer for a majority of the Company's outstanding shares, then within two Business Days following the consummation of such transaction (the "KANA CLOSING"), $0.10 per Purchased Share (the "REMAINING PURCHASE PRICE", together with the Initial Purchase Price, the "TOTAL PURCHASE PRICE"). Notwithstanding the foregoing, the Remaining Purchase Price shall be automatically increased to $0.15 per Purchased Share in the event that Seller does not receive payment of the Remaining Purchase Price within five Business Days following the Kana Closing. 1.3 CLOSING. (a) The closing ( the "CLOSING") of the purchase and sale of the Purchased Shares shall take place at the offices of Schulte Roth & Zabel LLP, 919 Third Avenue, New York, New York 10022, as promptly as practicable following the execution of this Agreement (but in any event no later than two Business Days following the announcement of the execution of the Asset Purchase Agreement, by and between Kay Technology Corp, Inc. and Kana, dated as of October 26, 2009 (the "KANA APA")), or at such other time and place as the Seller and the Purchasers mutually agree upon in writing (such date the "CLOSING DATE"). For purposes of this Agreement, "Business Day" means any day other than Saturday, Sunday or any other day on which commercial banks in New York City are authorized or required by Law (as defined in Section 2.4(b)) to remain closed. (b) The Seller shall deliver to the Purchasers: (i) promptly following the execution of this Agreement, wire transfer instructions, in writing, designating the Seller's account(s) to which the Purchasers shall deliver the Initial Purchase Price at Closing in accordance with the terms and conditions of this Agreement; and (ii) at or prior to the Closing, a certificate or certificates representing the Purchased Shares that the Purchasers are purchasing at such Closing, duly endorsed by the Seller (or accompanied by duly executed stock transfer powers executed in favor of the Purchasers), or other evidence of valid transfer of the Purchased Shares to the Purchasers in a form reasonably satisfactory to the Purchasers, as applicable, with all necessary transfer tax stamps affixed (any expense of acquiring such transfer tax stamps to be shared equally between Seller and Purchasers). (c) At or prior to the Closing, the Purchasers shall deliver to the Seller a wire transfer of immediately available funds to an account or accounts designated by the Seller, in the aggregate amount equal to the Initial Purchase Price; and 1.4 PAYMENT OF THE REMAINING PURCHASE PRICE. At or prior to two Business Days following the Kana Closing to the extent such Kana Closing is consummated within the Kana Closing Period, Purchasers shall deliver to the Seller by wire transfer of immediately available funds to an account or accounts designated by the Seller (such wire transfer instructions to be provided to Purchasers in writing at least two Business Days prior to the date of payment of the Remaining Purchase Price), an aggregate amount equal to the Remaining Purchase Price. 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. As a material inducement to the Purchasers to enter into this Agreement and purchase the Purchased Shares hereunder, the -2- Seller hereby represents and warrants to the Purchasers as of the date hereof and as of the Closing Date that: 2.1 ORGANIZATION, EXECUTION AND EFFECT OF AGREEMENT. (a) The Seller is a limited liability company that (A) is duly organized, validly existing and in good standing under the Laws (as defined herein) of its jurisdiction of formation, (B) is duly qualified or licensed to do business and is in good standing as a foreign limited liability company in each jurisdiction in which the character of the properties owned or leased by it or the nature of its business makes such qualification necessary, except for such of the foregoing in which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of Seller to enter into this Agreement or the other documents to be delivered at Closing hereunder (the "TRANSACTION DOCUMENTS") or consummate the transactions contemplated hereby or thereby, (C) has the requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform the transactions contemplated hereby and thereby to be performed by it, and (D) has duly taken all necessary action required to be taken under applicable Law for the due authorization of the execution and delivery by the Seller of this Agreement and the Transaction Documents to which it is a party and the performance by it of the transactions contemplated hereby or thereby. (b) This Agreement has been, and the Transaction Documents to which the Seller is a party will be, duly and validly executed and delivered by such Seller and, assuming the due execution and delivery of this Agreement by Purchasers, and assuming the due execution and delivery of the Transaction Documents by any other parties thereto, constitutes a legal, valid and binding obligation of the Seller, enforceable against such Seller in accordance with their terms. 2.2 OWNERSHIP. The Seller is the true and lawful owner, beneficially or of record, of, and has sole voting power and sole dispositive power over, the Purchased Shares. The Purchased Shares represent all of the shares of common stock of the Company and other securities convertible for or exchangeable into common stock of the Company owned by the Seller and its Affiliates (as defined in Section 11.2). The delivery of the certificates representing the Purchased Shares (or other evidence of transfer of the Purchased Shares in a form reasonably satisfactory to Purchasers) being sold by the Seller will transfer to Purchasers good and valid title to such Purchased Shares, free of any liens, security interests or other encumbrances, claims or voting or other restrictions (collectively, "LIENS") of any kind adverse to the Purchasers. 2.3 NO OPTIONS. There are no outstanding subscriptions, options, rights (including phantom stock rights), warrants, calls, commitments, understandings, arrangements, plans or other agreements of any kind affecting the Seller's Purchased Shares which will be applicable to the Purchased Shares following the Closing. 2.4 NO RESTRICTIONS. (a) There is no suit, action, claim, investigation or inquiry by any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentally of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision ("GOVERNMENTAL AUTHORITY"), and no legal, administrative or -3- arbitration proceeding pending or, to the Seller's knowledge, threatened against the Seller or any of its Purchased Shares, with respect to the execution, delivery and performance of this Agreement or any Transaction Documents or the transactions contemplated hereby or thereby or any other agreement entered into by such Seller in connection with the transactions contemplated hereby or thereby. (b) The execution and delivery by Seller of this Agreement and the Transaction Documents to which it is a party do not, and the performance by the Seller of the transactions contemplated hereby and thereby to be performed by it will not, conflict with, or result in any material violation of, or constitute a material default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligations or the loss of a material benefit or the incurrence of a material liability under, (i) any provision of the certificate of incorporation or bylaws or comparable governing documents of the Seller, or (ii) to the knowledge of Seller, any material permit or approval ("PERMIT"), if any, issued to Seller, under any statute, law, rule, regulation or ordinance (collectively, "LAWS") or any judgment, decree, order, writ, permit or license (collectively, "ORDERS") relating to Seller, except for those as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of Seller to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. (c) The execution, delivery and performance by the Seller of its obligations under this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby will not (i) result in the violation by the Seller of any Law or Order applicable only to it or any of its Purchased Shares or (ii) conflict with, result in any violation or breach of, constitute (with or without notice or lapse of time or both), a default under or require the Seller to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or give to any Person (as defined in Section 11.2) any right of payment or reimbursement, termination, cancellation, modification or acceleration, or result in the creation or imposition of any Lien upon the Seller's Purchased Shares, under any of, the terms conditions or provisions of any agreement, commitment, lease, license, evidence of indebtedness, mortgage, indenture, security agreement, instrument, note, bond, franchise, permit, concession or other instrument, obligation or agreement of any kind (collectively, "CONTRACTS") to which the Seller is a party or by which such Seller or any of its assets or properties are bound, in each case, except for (y) that certain Non-Disclosure Agreement between Seller and the Company dated as of July 30, 2009 and the Amended and Restated Rights Agreement, dated as of January 13, 2009 by and between Kana and Computershare Trust Company, N.A. (collectively, the "SELLER KANA AGREEMENTS"), or (z) as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Seller to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. 2.5 APPROVALS AND CONSENTS. Except as required under the Seller Kana Agreements, no material consent, approval or action of, filing with or notice to any Governmental Authority or Person is necessary or required under any of the terms, conditions or provisions of any Law or Order or any Contract to which the Seller is a party or its Purchased Shares are bound for the execution and delivery of this Agreement and any Transaction -4- Documents by the Seller, the performance by the Seller of its obligations hereunder or thereunder or the consummation by the Seller of the transactions contemplated hereby or thereby except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Seller to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. 2.6 BROKERS' FEES. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Purchasers could become liable or obligated. 3. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each of the Purchasers hereby represents, warrants and covenants as of the date hereof and as of the Closing Date that: 3.1 ORGANIZATION, AUTHORIZATION AND EFFECT OF AGREEMENT. (a) Purchaser is an exempted company that (A) is duly organized, validly existing and in good standing under the Laws of its jurisdiction of incorporation or formation, (B) is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction in which the character of the properties owned or leased by it or the nature of its business makes such qualification necessary, except for such of the foregoing in which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement, the Transaction Documents or to consummate the transactions contemplated hereby or thereby, (C) has the requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform the transactions contemplated hereby and thereby to be performed by it, and (D) has duly taken all necessary action required to be taken under applicable Law for the due authorization of the execution and delivery by the Purchaser of this Agreement and the Transaction Documents to which it is a party and the performance by it of the transactions contemplated hereby or thereby. (b) This Agreement has been, and the Transaction Documents to which the Purchaser is a party will be, duly and validly executed and delivered by such Purchaser and, assuming the due execution and delivery of this Agreement by Seller, and assuming the due execution and delivery of the Transaction Documents by any other parties thereto, constitutes a legal, valid and binding obligation of the Purchaser, enforceable against such Purchaser in accordance with their terms. 3.2 NO RESTRICTIONS. (a) There is no suit, action, claim, investigation or inquiry by any Governmental Authority, and no legal, administrative or arbitration proceeding pending or, to the Purchaser's knowledge, threatened against the Purchaser, with respect to the execution, delivery and performance of this Agreement or any Transaction Document or the transactions contemplated hereby or thereby or any other agreement entered into by such Purchaser in connection with the transactions contemplated hereby or thereby. (b) The execution and delivery by Purchaser of this Agreement and the Transaction Documents to which it is a party do not, and the performance by the Purchaser of the transactions contemplated hereby and thereby to be performed by it will not, conflict with, or result in any material violation of, or constitute a material default (with or without notice or lapse -5- of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any material obligations or the loss of a material benefit or the incurrence of a material liability under, (i) any provision of the certificate of incorporation or bylaws or comparable governing documents of the Purchaser, or (ii) to the knowledge of Purchaser, any material Permit, if any, issued to the Purchaser under any Laws or any Orders relating to such Purchaser, in each case except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. (c) The execution, delivery and performance by the Purchaser of its obligations under this Agreement and the Transaction Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby will not (i) result in the violation by the Purchaser of any Law or Order applicable only to it or (ii) conflict with, result in any violation or breach of, constitute (with or without notice or lapse of time or both), a default under or require the Purchaser to obtain any consent, approval or action of, make any filing with or give any notice to, or result in or give to, any Person any right of payment or reimbursement, termination, cancellation, modification or acceleration under any of, the terms, conditions or provisions of any Contracts to which the Purchaser is a party or by which such Purchaser or any of its assets or properties are bound, in each case except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. 3.3 APPROVALS AND CONSENTS. No consent, approval or action of, filing with or notice to any Governmental Authority or Person is necessary or required under any of the terms, conditions or provisions of any Law or Order or any Contract to which the Purchaser is a party for the execution and delivery of this Agreement and any Transaction Documents by the Purchaser, the performance by the Purchaser of its obligations hereunder or thereunder or the consummation by the Purchaser of the transactions contemplated hereby or thereby except as would not, individually or in the aggregate, reasonably be expected to have or result in a material adverse effect on the authority or ability of the Purchaser to enter into this Agreement or the Transaction Documents or to consummate the transactions contemplated hereby and thereby. 3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Purchased Shares to be received by the Purchaser will be acquired by the Purchaser for investment purposes only, and not with a view to the resale of any part thereof, and that the Purchaser has no present intention of selling or granting any participation in the same. By executing this Agreement, the Purchaser further represents that it does not have any Contract, undertaking, agreement or arrangement with any person or entity to sell, transfer or grant participations to such person or entity or to any third person or entity, with respect to any of the Purchased Shares. 3.5 BROKERS' FEES. The Purchaser has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which the Seller could become liable or obligated. -6- 3.6 FINANCING. The Purchaser has and will have at the Closing and at the Kana Closing sufficient cash immediately available to pay the Total Purchase Price. 4. AGREEMENTS WITH RESPECT TO MATERIAL NON-PUBLIC INFORMATION. 4.1 Each of the Purchasers and the Seller is sophisticated with respect to transactions in the Purchased Shares and has adequate information concerning the business and financial condition of the issuer of the Purchased Shares to make an informed decision regarding the purchase and sale contemplated hereby and has independently and without reliance upon the other and based on such information as it has deemed appropriate in its independent judgment made its own analysis and decision to enter into the transaction. 4.2 Each party hereto has executed a confidentiality agreement with the Company and hereby acknowledges that the other party and its representatives may have received and may possess material non-public information ("NON-PUBLIC INFORMATION") regarding the Purchased Shares, the issuer of the Purchased Shares or its other outstanding debt or securities that may not have been provided to the other party, including, without limitation, information received on a confidential basis directly or indirectly from the issuer. Such Non-public Information may be indicative of a value of the Purchased Shares that is substantially more than the Total Purchase Price reflected in the transaction contemplated hereby or otherwise adverse to either party's interest, and, therefore, such information might be material to the Seller's decision to sell the Purchased Shares or the Purchaser's decision to purchase the Purchased Shares. Each of the Purchasers and Seller acknowledges that it has not requested and does not wish to receive Non-public Information from the other party and agrees that neither party shall have any liability to the other with respect to the non-disclosure of Non-public Information. 4.3 Each of Purchasers and Seller expressly releases the other, its Affiliates and their respective officers, directors, employees, agents and controlling persons from any and all liabilities arising from their respective failure to disclose or review, such Non-public Information, and each of Purchasers and Seller agrees to make no claim against the other, its Affiliates and their respective officers, directors, employees, shareholders, partners, agents, representatives or Affiliates with respect to the transaction, relating to such failure to disclose, or to review Non-public Information. 4.4 Purchasers and Seller are relying on the other's representations in engaging in the transaction contemplated hereby, and would not engage in such transaction in the absence of such representations. 4.5 This Section 4 represents the entire understanding and agreement between the parties hereto with respect to the subject matter hereof as to disclosure or non-disclosure of the Non-public Information, and supersedes any prior or contemporaneous agreements relating thereto. 5. COVENANTS 5.1 Each of Purchasers and Seller shall, (i) subject to the satisfaction of the conditions to such party's obligations set forth in Sections 6, 7, and 8, execute and deliver -7- such other documents, certificates, agreements and other writings and (ii) take such other actions, in each case, as may be necessary or reasonably requested by the other in order to consummate or implement expeditiously the transactions contemplated hereby in accordance with the terms of this Agreement. 5.2 Each of Purchasers and Seller shall use its reasonable best efforts to cause all conditions precedent to the obligations of Purchasers and the Seller to be satisfied. Upon the terms and subject to the conditions of this Agreement, each of the Purchasers and Seller will use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with applicable law to consummate and make effective in the most expeditious manner practicable the transactions contemplated hereby. 5.3 Subject to the consummation of the purchase and sale of the Purchased Shares contemplated by Section 1, for a period of twelve months following the Closing, the Seller shall not, and shall cause its Affiliates, directors, officers, and employees not to, directly or indirectly, acting alone or in concert with others, acquire, sell or otherwise transfer ownership of (including "beneficial ownership" as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) any securities or indebtedness of, or any economic interest in, the Company or any of its subsidiaries (including any participation interest therein or any assets underlying such securities or indebtedness). 5.4 Purchasers hereby agree to indemnify and hold harmless Seller from and against any and all any and all losses, liabilities, costs, damages, and expenses (including, without limitation, reasonable attorneys' fees, disbursements and administrative or court costs) relating to any failure by Purchasers to pay Seller any portion of the Total Purchase Price. 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASERS AND THE SELLER. The obligations of each of Purchasers and the Seller under this Agreement to consummate the transactions contemplated hereby will be subject to the satisfaction, at or prior to the Closing, of the following conditions: 6.1 RESTRAINING ACTION. There shall not have been entered a preliminary or permanent injunction, temporary restraining order or other judicial or administrative order or decree in any jurisdiction, the effect of which prohibits the Closing. 7. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASERS. The obligations of Purchasers under this Agreement to consummate the transactions contemplated hereby will be subject to the satisfaction, at or prior to the Closing, of all of the following conditions, any one or more of which may be waived at the option of Purchasers: 7.1 NO MATERIAL MISREPRESENTATION OR BREACH. (a) There shall have been no material breach by the Seller in the performance of any of the covenants herein to be performed by him, her or it in whole or in part prior to the Closing and (b) the representations and warranties of the Seller contained in this Agreement (i) that are not qualified as to materiality or material adverse effect shall be true and correct in all material respects and (ii) that are so -8- qualified shall be true and correct, in each case on the date hereof and as of the Closing Date as if made anew on the Closing Date, except for representations or warranties made as of a specified date, which shall be true and correct in all material respects as of the specified date; and 7.2 CLOSING DELIVERABLES. The Purchasers shall have received the closing deliverables described in Section 1.3(b). 8. ADDITIONAL CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER. The obligations of the Seller under this Agreement to consummate the transactions contemplated hereby will be subject to the satisfaction, at or prior to the Closing, of all the following conditions, any one or more of which may be waived by the Seller at its option: 8.1 NO MATERIAL MISREPRESENTATION OR BREACH. (a) There shall have been no material breach by Purchasers in the performance of any of the covenants herein to be performed by it in whole or in part prior to the Closing and (b) the representations and warranties of Purchasers contained in this Agreement (i) that are not qualified as to materiality or material adverse effect shall be true and correct in all material respects and (ii) that are so qualified (if any) shall be true and correct, in each case on the date hereof and as of the Closing Date as if made anew on the Closing Date, except for representations or warranties made as of a specified date, which shall be true and correct in all material respects as of the specified date; and 8.2 CLOSING DELIVERABLES. The Seller shall have received the closing deliverables described in Section 1.3(c). 9. TERMINATION. (a) Notwithstanding anything contained in this Agreement to the contrary, this Agreement may be terminated at any time prior to the Closing: (i) by the mutual written consent of Purchasers and the Seller; (ii) by either Purchasers or the Seller, if the Closing shall not have occurred on or before October 30, 2009, provided, however, that the right to terminate this Agreement pursuant to this Section 9(a)(ii) will not be available to any party whose breach of any provision of this Agreement results in the failure of the Closing to occur by such time; (iii) by either Purchasers or the Seller if there shall have been entered a final, nonappealable order or injunction of any Governmental Authority restraining or prohibiting the consummation of the transactions contemplated hereby or any material part thereof; (iv) by Purchasers if the Seller shall have (i) failed to perform any obligation or to comply with any agreement or covenant of the Seller under this Agreement or (ii) breached any of its representations or warranties, in each case such that the condition in Section 7.1 would not be satisfied, which failure has not been cured within ten calendar days of notice from Purchasers; or (v) by the Seller if the Purchasers shall have (i) failed to perform any obligation or comply with any agreement or covenant of Purchasers under this Agreement or (ii) breached any of its representations or warranties, in each case such that the condition in Section 8.1 would not be satisfied, which failure has not been cured within ten calendar days of notice -9- from the Seller. (b) In the event of the termination of this Agreement under this Section 9, each party hereto will pay all of its own fees and expenses. There will be no further liability hereunder on the part of any party hereto if this Agreement is so terminated, except by reason of a prior breach of any representation, warranty or covenant contained in this Agreement. 10. RELEASE OF CLAIMS. Subject to the occurrence of the Closing and the payment of all amounts due Seller under this Agreement, the Seller, its representatives and Affiliates hereby release and forever discharge the Company, its subsidiaries, representatives and Affiliates and the Purchasers, their representatives and Affiliates from any and all actions, causes of action, suits, debts, claims and demands (except for liabilities and obligations arising under this Agreement and the Transaction Documents) that arise out of or relate to acts, events, conditions or omissions occurring or existing at any time prior to and including the Closing Date. 11. MISCELLANEOUS. 11.1 SURVIVAL. The warranties, representations and covenants of the Purchasers and the Seller contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement. 11.2 SUCCESSORS AND ASSIGNS; ASSIGNMENT. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties (including permitted transferees of any Purchased Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. This Agreement may not be assigned by any party without the prior written consent of the other party. Notwithstanding the foregoing, the Seller and Purchasers may assign this Agreement and any or all rights or obligations hereunder, without the consent of the other party, to one or more of their respective Affiliates; PROVIDED that no assignment or attempted assignment shall relieve the assignor of any of its obligations under this Agreement. For purposes of this Agreement, "Affiliate" means any individual, group of individuals or entity, including without limitation, any trust, custodian, individual retirement account, corporation, limited liability company, joint venture, limited partnership or general partnership (each, a "PERSON"), that, directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with a Person, (ii) any other Person that, directly or indirectly, is the beneficial owner of a majority of any class of equity securities of the specified person or of which the specified Person is directly or indirectly the owner of a majority of any class of equity securities or (iii) with respect to Purchasers, any fund or account that is managed by the Purchasers. 11.3 PRESS RELEASES. Purchasers and Seller will consult with the other before issuing, and provide the other the opportunity to review, comment upon and approve, any press release or other public statements with respect to this Agreement, the Transaction Documents or the transactions contemplated hereby or thereby and will not issue any such press release or make any such public statement without the other party's prior written consent, -10- except that a party hereto may make such disclosures as are required by applicable Law, but only after disclosing to the other party the basis for concluding that such disclosure is so required and consulting with the other parties regarding the contents of such disclosure prior thereto. Notwithstanding anything to the contrary contained in this Agreement, nothing contained in this Agreement shall restrict the parties hereto from filing with the Securities and Exchange Commission a Schedule 13D with respect to Kana (or any amendment thereto), to which this Agreement shall be an exhibit, and detailing the terms and conditions hereof. 11.4 GOVERNING LAW. This Agreement shall be governed by and construed under the laws of the State of New York as applied to agreements among New York residents entered into and to be performed entirely within New York. Any judicial proceeding brought with respect to this Agreement must be brought in any court of competent jurisdiction in the State of New York. 11.5 SPECIFIC PERFORMANCE. Each party hereto acknowledges and agrees that the other party would be irreparably damaged in the event the provisions of this Agreement are not specifically enforced in the event of a breach hereof by such party and that such damage could not be adequately remedied by the payment of money damages. Consequently, in addition to any other remedies that may be available at law or at equity, each party agrees that upon any breach or threatened breach of this Agreement by such party, the other party hereto shall be entitled to temporary and permanent injunctive or other appropriate equitable relief to restrain or otherwise prevent such breach or threatened breach without posting any bond and without proving that monetary damages would be inadequate. 11.6 LIMITATION ON DAMAGES. Notwithstanding any other provisions of this Agreement, in no event will any party hereto be liable to any other party for, nor will any party be entitled to claim for, any lost profits or consequential, exemplary, indirect, punitive or special damages or losses with respect to any claim arising out of or related to this Agreement or the transactions contemplated hereby. 11.7 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 11.8 NOTICES. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (i) upon personal delivery to the party to be notified, (ii) when sent by confirmed telex or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (iii) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the address as specified below or to any other address or addresses as any party may from time to time designate by written notice to the other party; as set forth on the signature page hereof or at such other address as such party may designate by ten days advance written notice to the other parties hereto. -11- If to Purchasers, to: Black Diamond Offshore Ltd. c/o Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Dallas, Texas 75201 Attention: Steven J. Pully Double Black Diamond Offshore Ltd. c/o Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Dallas, Texas 75201 Attention: Steven J. Pully If to Seller, to: KVO Capital Management, LLC 33 South Main Street Hanover, NH 03755 Attention: Robert Ashton With a copy to: Nutter, McClennen & Fish, LLP 155 Seaport Boulevard World Trade Center West Boston, MA 02210 Attention: Alexander S. Glovsky 11.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of each of the Purchasers and Seller. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any securities purchased under this Agreement at the time outstanding (including securities into which such securities are convertible), each future holder of all such securities and the Seller. 11.10 SEVERABILITY. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall he enforceable in accordance with its terms. 11.11 ENTIRE AGREEMENT. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. 11.12 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -12- 12. GUARANTY BY CARLSON. Carlson hereby absolutely, unconditionally and irrevocably guarantees, as principal and not as a surety, to the Seller the prompt and complete payment in full as and when due and payable by Purchasers (and its successors and permitted assigns) of any and all amounts payable by Purchasers pursuant to this Agreement. If for any reason Purchasers shall fail or be unable promptly and fully to pay any of their respective obligations under this Agreement as and when the same shall be due and payable hereunder, Carlson shall forthwith pay or cause to be paid such amounts to the Seller, and the Seller shall not be obligated to pursue remedies against Purchasers as a condition to enforcement of this guaranty. Carlson represents and warrants to the Seller that it has the full corporate power and authority to provide the guaranty contained in this Section 12, to perform its obligations with respect thereto and to execute this Agreement for the purposes thereof. -13- IN WITNESS WHEREOF, the parties have executed this Agreement as of the above written. Double Black Diamond Offshore Ltd. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson -------------------------------- Name: Clint D. Carlson Title: President Black Diamond Offshore Ltd. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson -------------------------------- Name: Clint D. Carlson Title: President Carlson Capital, L.P. By: Asgard Investment Corp., its general partner By: /s/ Clint D. Carlson -------------------------------- Name: Clint D. Carlson Title: President KVO Capital Management, LLC By: /s/ Kernan Oberting -------------------------------- Name: Kernan Oberting Title: Managing Member Owner of 3,354,343 Purchased Shares on the date hereof. [Signature Page SPA] EX-99 4 p09-1886exhibit4.txt EXHIBIT 4--VOTING AGREEMENT AND PROXY EXECUTION COPY VOTING AGREEMENT AND IRREVOCABLE PROXY This Voting Agreement and Irrevocable Proxy (this "AGREEMENT") is entered into as of October 26, 2009, by and between Kay Technology Corp, Inc., a Delaware corporation ("PURCHASER"), and the undersigned stockholders (each a "STOCKHOLDER" and collectively, "STOCKHOLDERS") of Kana Software, Inc., a Delaware corporation ("COMPANY"). Terms not otherwise defined herein shall have the respective meanings ascribed to them in the Asset Purchase Agreement (as defined below). RECITALS A. WHEREAS, the execution and delivery of this Agreement by Stockholders is a material inducement to the willingness of Purchaser to enter into that certain Asset Purchase Agreement, dated of even date herewith (the "ASSET PURCHASE AGREEMENT"), by and among Purchaser and Company, pursuant to which Purchaser will acquire substantially all of the assets of Company (the "ASSET Purchase"). B. WHEREAS, Stockholders understand and acknowledge that Purchaser is entitled to rely on (i) the truth and accuracy of each Stockholder's representations contained herein and (ii) each Stockholder's performance of the obligations set forth herein. NOW, THEREFORE, in consideration of the promises and the covenants and agreements set forth in the Asset Purchase Agreement and in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. RESTRICTIONS ON SHARES. (a) Neither Stockholder shall, directly or indirectly, transfer (except as may be specifically required by court order or by operation of law), grant an option with respect to, sell, exchange, pledge, tender or otherwise dispose of, or encumber (each a "TRANSFER"), the Shares (as defined in SECTION 4 below) or any New Shares (as defined in SECTION 1(C) below), or make any offer or enter into any agreement providing for or commit to do any of the foregoing, at any time prior to the Expiration Time (as defined below in this SECTION 1(A)). Notwithstanding the foregoing, each Stockholder is hereby permitted to Transfer all or any portion of its Shares or New Shares to an affiliate of such Stockholder without the consent of the Purchaser; PROVIDED that, prior to, and as a condition of, any such Transfer, the transferee shall enter into and deliver to Purchaser a voting agreement and irrevocable proxy in favor of Purchaser substantially in the form of this Agreement with respect to the Shares or New Shares transferred to such transferee. As used herein, the term "EXPIRATION TIME" shall mean the earlier of: (i) the Closing Date; (ii) the valid termination of the Asset Purchase Agreement in accordance with its terms pursuant to SECTIONS 11.1(A), 11.1(C), 11.1(F) or 11.1(H); (iii) the six month anniversary of the valid termination of the Asset Purchase Agreement in accordance with its terms pursuant to SECTION 11.1(B); (iv) the nine month anniversary of the valid termination of the Asset Purchase Agreement in accordance with its terms pursuant to SECTIONS 11.1(D), 11.1(E), 11.1(G) or 11.1(I); or (v) such date and time designated by Purchaser in a written notice to each Stockholder. (b) Except pursuant to the terms of this Agreement, at any time on or after the date of this Agreement and prior to the Expiration Time, neither Stockholder shall, directly or indirectly, grant any proxies or powers of attorney with respect to any of the Shares, deposit any of the Shares into a voting trust, or enter into a voting agreement or similar arrangement or commitment with respect to any of the Shares or commit to do any of the foregoing. (c) Any shares of capital stock or other securities of Company that any Stockholder purchases or with respect to which any Stockholder otherwise acquires beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) on or after the date of this Agreement and prior to the Expiration Time (collectively, the "NEW SHARES") shall be subject to the terms and conditions of this Agreement to the same extent as if they constituted Shares. 2. AGREEMENT TO VOTE SHARES. (a) Prior to the Expiration Time, at every meeting of the stockholders of Company called with respect to any of the following matters, and at every adjournment or postponement thereof, and on every action or approval by written consent or resolution of the stockholders of Company with respect to any of the following matters, unless otherwise directed in writing by Purchaser, each Stockholder shall vote, to the extent not voted by the person(s) appointed under the Proxy (as defined in SECTION 3 below), the Shares and any New Shares (i) in favor of approval of the adoption of the Asset Purchase Agreement (or any amended version thereof) and the Asset Purchase, (ii) in favor of the name change contemplated by the Asset Purchase Agreement, (iii) in favor of any proposal to adjourn the meeting to solicit additional proxies in favor of the approval of the Asset Purchase Agreement and (iv) against any Acquisition Proposal (including any Superior Proposal) or any other corporate action which would frustrate the purpose of or prevent or delay the consummation of the transactions contemplated by the Asset Purchase Agreement; PROVIDED, HOWEVER, that the Proxy and the agreements and restrictions contained in this SECTION 2(A) will not apply to any Shares or New Shares that, in the aggregate, represent more than 22.0% of the voting power or then-outstanding common stock of the Company at any time (but only to the extent of those Shares or New Shares in excess of 22%). (b) Notwithstanding the foregoing, nothing in this Agreement shall limit or restrict any Stockholder from (i) acting in Stockholder's capacity as a director or officer of Company, including in the exercise of such Stockholder's fiduciary duties with respect to an Acquisition Proposal in compliance with the terms of the Asset Purchase Agreement, or (ii) subject to SECTION 2(D) below, voting in Stockholder's sole discretion on any matter other than matters referred to in SECTION 2(A) hereof, to the extent applicable, it being understood that this Agreement shall apply to each Stockholder solely in such Stockholder's capacity as a stockholder of Company. (c) Prior to the Expiration Time, each Stockholder shall not (and shall cause its and its affiliates' respective partners, members, officers, directors, employees, attorneys, accountants, agents, affiliates, advisors and representatives to not), directly or indirectly, solicit, initiate, propose or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, an Acquisition Proposal; participate or engage in discussions or negotiations with any Person with respect to any Acquisition Proposal (except to notify such Person as to the existence of this SECTION 2(C) of this Agreement); or alone or with any other Person, make an Acquisition Proposal. Each Stockholder shall promptly inform Purchaser if it receives any inquiry or proposal relating to an Acquisition Proposal and the details thereof. 2 (d) Each Stockholder shall not (and shall cause its and its affiliates' respective partners, members, officers, directors, employees, attorneys, accountants, agents, affiliates, advisors and representatives to not) take or agree to take or commit to take any action with the intent of, or for the purpose of, in each case in whole or in part, preventing or delaying the consummation of the transactions contemplated by the Asset Purchase Agreement. 3. IRREVOCABLE PROXY. Concurrently with the execution and delivery of this Agreement, each Stockholder shall deliver to Purchaser a duly executed proxy in the form attached hereto as EXHIBIT A (the "PROXY"), which proxy is coupled with an interest sufficient in law to support an irrevocable proxy (subject to the last sentence of this SECTION 3), and, until the Expiration Time, shall be irrevocable to the fullest extent permitted by law, with respect to each and every meeting of stockholders of Company or action or approval by written resolution or consent of stockholders of Company with respect to the matters contemplated by SECTION 2 covering the total number of Shares and New Shares up to an amount that represents, in the aggregate, at any time, 22.0% of voting power or the then-outstanding common stock of the Company (the "PROXY SHARES") in respect of which Stockholders are entitled to vote at any such meeting or in connection with any such written consent. Upon the execution of this Agreement by Stockholders, with respect to the Proxy Shares (i) Stockholders hereby revoke any and all prior proxies (other than the Proxy) given by Stockholders with respect to the subject matter contemplated by SECTION 2, and (ii) Stockholders shall not grant any subsequent proxies with respect to such subject matter, or enter into any agreement or understanding with any Person to vote or give instructions with respect to the Proxy Shares in any manner inconsistent with the terms of SECTION 2, until after the Expiration Time. The Proxy shall be revoked and shall terminate automatically, and shall be of no further force and effect, immediately upon the occurrence of the Expiration Time. 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER. Each Stockholder hereby represents, warrants and covenants to Purchaser as follows as of the date hereof: (a) Stockholder is the beneficial or record owner of, or exercises voting power over, that number of shares of capital stock set forth on the signature page hereto (all such shares owned beneficially or of record by Stockholder, or over which Stockholder exercises voting power, on the date hereof, collectively, the "SHARES"). The Shares constitute Stockholder's entire interest in the outstanding shares of capital stock and neither Stockholder nor any of its affiliates is the beneficial or record holder of, nor exercises voting power over, any other outstanding shares of capital stock of Company. No person not signatory to this Agreement has a right to acquire or vote any of the Shares. The Shares are and will be at all times up until the Expiration Time free and clear of any Liens that would materially and adversely affect the exercise or fulfillment of the rights and obligations of Stockholder under this Agreement or of the parties to this Agreement. As of the date hereof, the Shares represent 11.901% of the voting power or outstanding common stock of the Company. Each Stockholder has a binding agreement to acquire New Shares totaling 5,710,814 shares of common stock of the Company. Stockholder shall use its reasonable best efforts so that, within three (3) Business Days of the date hereof, Stockholder shall be the beneficial or record owner of such New Shares. Assuming the Stockholders' acquisition of such New Shares, Stockholders shall be the beneficial or record owners of 10,615,677 shares of common stock of the Company, which shall represent 25.757% of the voting power or outstanding common stock of the Company as of such date. (b) Stockholder does not own, beneficially or legally, any options, restricted stock units, warrants or other rights to acquire, directly or indirectly, shares of capital stock of the Company (collectively, the "COMPANY WARRANTS AND OTHER RIGHTS"). For the avoidance of doubt, Stockholder shall not acquire, directly or indirectly, Company Warrants and Other Rights between the date hereof and the Expiration Date. 3 (c) Stockholder has all requisite power, capacity and authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Stockholder and the consummation by Stockholder of the transactions contemplated hereby have been duly authorized by all necessary action, if any, on the part of Stockholder (or its general partner or similar governing body, as applicable), and no other actions or proceedings on the part of the Stockholder are necessary to authorize the execution and delivery by the Stockholder of this Agreement and the consummation by the Stockholder of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Stockholder and, assuming the due authorization, execution and delivery of this Agreement by Purchaser, constitutes a valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity. (d) The execution and delivery of this Agreement does not, and the performance by Stockholder of its agreements and obligations hereunder will not, conflict with, result in a breach or violation of or default under (with or without notice or lapse of time or both), or require notice to or the consent of any person under, any provisions of the organizational documents of Stockholder (if applicable), or any binding agreement, law, rule, regulation, judgment, order or decree to which Stockholder is a party or by which Stockholder is, or any of its assets are, bound, except for such conflicts, breaches, violations or defaults that would not, individually or in the aggregate, prevent or materially delay Stockholder from performing its obligations under this Agreement. (e) Each Stockholder has executed this Agreement in Dallas, Texas. (f) Neither Stockholder nor any of their respective affiliates has any agreement with the Company or any other Person with respect to the Company or the voting, holding or disposition of the Shares, other than that certain Stock Purchase Agreement, dated as of the date hereof, by and among the Stockholders, Carlson Capital, L.P. and KVO Capital Management, LLC and certain Stock Purchase Agreement, dated as of the date hereof, by and among the Stockholders and NightWatch Capital Partners II, LP. (g) Carlson Capital, L.P. agrees and acknowledges that it shall take all actions necessary to cause each Stockholder and each affiliate and transferee of each Stockholder to comply in all respects with this Agreement and the Proxy. 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents and warrants to Stockholders as follows: (i) Purchaser has full power and authority to make, enter into and carry out the terms of this Agreement; (ii) this Agreement has been duly and validly executed and delivered by Purchaser and constitutes a valid and binding agreement of Purchaser enforceable against Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditors' rights and remedies generally and to general principles of equity; and (iii) the execution and delivery of this Agreement does not, and the performance by Purchaser of its agreements and obligations hereunder will not, conflict with, result in a breach or violation of or default under (with or without notice or lapse of time or both), or require notice to or the consent of any person under, any provisions of the organizational documents of Purchaser, or any law, rule, regulation, judgment, order or decree to which Purchaser is a party or by which Purchaser is, or any of its assets are, bound, except for such conflicts, breaches, violations or defaults that would not, individually or in the aggregate, prevent or materially delay Purchaser's ability to perform its obligations under this Agreement. 4 6. CONFIDENTIALITY. Each Stockholder shall hold any information regarding this Agreement and the Asset Purchase in strict confidence and shall not divulge any such information to any third person until the Purchaser has publicly disclosed the Asset Purchase, provided however, that Stockholders may disclose any such information to such Stockholder's directors, officers, members, employees, agents, attorneys, advisors and other representatives solely for the purpose of evaluating the Asset Purchase Agreement, the Asset Purchase and the other transactions contemplated by the Asset Purchase Agreement. Neither the Stockholder, nor any of its affiliates (other than Company, whose actions shall be governed by the Asset Purchase Agreement and the Confidentiality Agreement), shall issue or cause the publication of any press release or other public announcement with respect to this Agreement, the Asset Purchase, the Asset Purchase Agreement or the other transactions contemplated hereby or thereby without the prior written consent of the Purchaser, except as may be required by applicable law in which circumstance such announcing party shall make reasonable efforts to consult with the Purchaser to the extent practicable. 7. MISCELLANEOUS. (a) NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given on (i) the date of delivery, if delivered personally or by commercial delivery service, or (ii) on the date of confirmation of receipt (or the next Business Day, if the date of confirmation of receipt is not a Business Day), if sent via facsimile (with confirmation of receipt), to the parties hereto at the following address (or at such other address for a party as shall be specified by like notice): (i) if to Purchaser, to: c/o Kay Technology Corp, Inc. 2500 Sand Hill Road, Suite 300 Menlo Park, California 94025 Facsimile: 650-289-2461 Attention: Tom Barnds Jason Klein Mark Duffell with a copy (which shall not constitute notice) to: Kirkland & Ellis LLP 300 North LaSalle Chicago, Illinois 60654 Facsimile: 312-862-2000 Attention: Jeffrey Seifman, P.C. Carol Anne Huff Shelly M. Hirschtritt (ii) if to any Stockholder, to the address set forth for the Stockholder on the signature page hereof. (b) INTERPRETATION. When a reference is made in this Agreement to sections or exhibits, such reference shall be to a section of or an exhibit to this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. The words "include," "includes" and "including" when used herein shall be deemed in each case to be followed by the words "without limitation." The phrases "the date of this Agreement", "the date hereof", and terms of similar import, unless the context otherwise requires, shall be deemed to refer to the date first above written. Unless the context of this Agreement 5 otherwise requires: (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; and (iii) the terms "hereof," "herein," "hereunder" and derivative or similar words refer to this entire Agreement. (c) SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF. The parties hereto acknowledge that Purchaser will be irreparably harmed and that there will be no adequate remedy at law for a violation of any of the covenants or agreements of Stockholders set forth herein or in the Proxy. Therefore, it is agreed that, in addition to any other remedies that may be available to Purchaser upon any such violation of this Agreement or the Proxy, Purchaser shall have the right to enforce such covenants and agreements and the Proxy by specific performance, injunctive relief or by any other means available to Purchaser at law or in equity and each Stockholder hereby waives any requirement for the security or posting of any bond in connection with such enforcement. (d) COUNTERPARTS. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties hereto; it being understood that all parties need not sign the same counterpart. (e) ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto (including, without limitation, the Proxy) (i) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and (ii) are not intended to confer, and shall not be construed as conferring, upon any person other than the parties hereto any rights or remedies hereunder. Except as provided in SECTION 1(A), neither this Agreement nor any of the rights, interests, or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of law or otherwise, by Stockholders without the prior written consent of Purchaser, and any such assignment or delegation that is not consented to shall be null and void. This Agreement, together with any rights, interests or obligations of Purchaser hereunder, may be assigned or delegated in whole or in part by Purchaser to any affiliate of Purchaser without the consent of or any action by Stockholders upon notice by Purchaser to Stockholders as herein provided. Subject to the preceding sentence, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the parties hereto and their respective successors and assigns. (f) SEVERABILITY. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement shall continue in full force and effect and the application of such provision to other persons or circumstances shall be interpreted so as reasonably to effect the intent of the parties hereto. The parties hereto further agree to use their commercially reasonable efforts to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that shall achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision. (g) REMEDIES CUMULATIVE. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party shall be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy shall not preclude the exercise of any other remedy. (h) GOVERNING LAW; JURISDICTION. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without reference to such state's principles of conflicts of law. Any judicial proceeding brought against any of the parties to this Agreement or any 6 dispute arising out of this Agreement or related hereto may be brought in the courts of the State of Delaware or in the United States District Court in the State of Delaware, and, by execution and delivery of this Agreement, each of the parties to this Agreement accepts the exclusive jurisdiction of such courts, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. The foregoing consents to jurisdiction shall not constitute general consents to service of process in the State of Delaware for any purpose except as provided above and shall not be deemed to confer rights on any Person other than the parties to this Agreement. Each of the parties to this Agreement agree that service of any process, summons, notice or document by U.S. mail to such party's address for notice hereunder shall be effective service of process for any action, suit or proceeding in Delaware with respect to any matters for which it has submitted to jurisdiction pursuant to this SECTION 7(H). (i) TERMINATION. This Agreement shall terminate automatically without any action on the part of the parties hereto and shall have no further force or effect from and after the Expiration Time, and thereafter there shall be no liability or obligation on the part of the Stockholders, PROVIDED, that no such termination shall relieve any party from liability for any breach of this Agreement prior to such termination. (j) AMENDMENT. Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by each of the parties hereto, or in the case of a waiver, by the party against which the waiver is to be effective. Notwithstanding the foregoing, no failure or delay by any party hereto in exercising any right hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any right hereunder. (k) NO OWNERSHIP INTEREST. Nothing contained in this Agreement shall be deemed to vest in Purchaser or any of its affiliates any direct or indirect ownership or incidence of ownership of or with respect to any Shares or New Shares. All rights, ownership and economic benefits of or relating to the Shares and New Shares shall remain vested in and belong to Stockholders, and Purchaser shall have no authority to manage, direct, superintend, restrict, regulate, govern or administer any of the policies or operations of Company or exercise any power or authority to the Stockholders in the voting of any of the Shares or New Shares, except as otherwise provided herein and in the Asset Purchase Agreement. (l) RULES OF CONSTRUCTION. The parties hereto agree that they have been represented by counsel during the negotiation, preparation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document shall be construed against the party drafting such agreement or document. (m) ADDITIONAL DOCUMENTS, ETC. Stockholders shall execute and deliver any additional documents reasonably necessary to carry out the purpose and intent of this Agreement. [Signature Page Follows] 7 IN WITNESS WHEREOF, the parties hereto have caused this Voting Agreement to be executed as of the date first above written. KAY TECHNOLOGY CORP, INC. By: /s/ Jason Klein ----------------------------------------------- Name: Jason Klein Title: President STOCKHOLDER: Double Black Diamond Offshore Ltd. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner /s/ Clint D. Carlson ----------------------------------------------- (Signature) CLINT D. CARLSON, PRESIDENT ------------------------------------------------ (Print name and title if signing on behalf of an entity) c/o Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Attention: Steve J. Pully Telephone No. (214) 932-0847 Shares and Company Warrants and Other Rights beneficially owned on the date hereof: 4,611,057 shares of Company common stock --------- 0 shares subject to Company Warrants --------- STOCKHOLDER: Black Diamond Offshore Ltd. By: Carlson Capital, L.P., its investment manager By: Asgard Investment Corp., its general partner Clint D. Carlson ------------------------------------------------ (Signature) Clint D. Carlson, President (Print name and title if signing on behalf of an entity) c/o Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Attention: Steve J. Pully Telephone No. (214) 932-0847 Shares and Company Warrants and Other Rights beneficially owned on the date hereof: 293,806 shares of Company common stock --------- 0 shares subject to Company Warrants --------- CARLSON CAPITAL, L.P. By: Asgard Investment Corp., its general partner Clint D. Carlson ------------------------------------------------ (Signature) CLINT D. CARLSON, PRESIDENT (Print name and title if signing on behalf of an entity) c/o Carlson Capital, L.P. 2100 McKinney Avenue, Suite 1600 Attention: Steve J. Pully Telephone No. (214) 932-0847 EXHIBIT A IRREVOCABLE PROXY TO VOTE STOCK OF KANA SOFTWARE, INC. The undersigned stockholders ("STOCKHOLDERS") of Kana Software, Inc., a Delaware corporation ("COMPANY"), hereby irrevocably (to the fullest extent permitted by applicable law) appoint Jason Klein, the President of Kay Technology Corp, Inc., a Delaware corporation ("PURCHASER"), and each of them, or any other designee of Purchaser, as the sole and exclusive attorneys and proxies of the undersigned, with full power of substitution and resubstitution, to vote and exercise all voting and related rights (to the fullest extent that the undersigned is entitled to do so) with respect to the shares of capital stock of Company that now are or hereafter may be beneficially owned by the undersigned and other shares or securities of Company issued or issuable in respect thereof on or after the date hereof up to an amount that represents, in the aggregate, at any time, 22.0% of the shares of the voting power or then-outstanding common stock of the Company (collectively, the "SHARES") in accordance with the terms of this Irrevocable Proxy. The total such Shares or securities of the Company beneficially owned by the undersigned stockholders of Company as of the date of this Irrevocable Proxy are listed on the final page of this Irrevocable Proxy. Upon the undersigned's execution of this Irrevocable Proxy, any and all prior proxies given by the undersigned with respect to any Shares are hereby revoked and the undersigned agrees not to grant any subsequent proxies or enter into any agreement or understanding with any Person (as defined in the Asset Purchase Agreement (as defined below)) to vote or give instructions with respect to the Shares in any manner inconsistent with the terms of this Irrevocable Proxy until after the Expiration Time (as defined below). Terms not otherwise defined herein shall have the respective meanings ascribed to them in the Asset Purchase Agreement. (a) Until the Expiration Time, this Irrevocable Proxy is irrevocable (to the fullest extent permitted by applicable law), is coupled with an interest sufficient in law to support an irrevocable proxy (subject to the second sentence of this paragraph), is granted pursuant to that certain Voting Agreement, and is granted in consideration of Purchaser entering into that certain Asset Purchase Agreement dated as of the date hereof (the "ASSET PURCHASE AGREEMENT"), by and among Purchaser and Company, pursuant to which Purchaser will acquire substantially all of the assets of Company (the "ASSET PURCHASE"). This Irrevocable Proxy shall be revoked and shall terminate automatically, and shall be of no further force and effect, immediately upon the occurrence of the Expiration Time. As used herein, the term "EXPIRATION TIME" shall mean the earlier of: (i) the Closing Date; (ii) the valid termination of the Asset Purchase Agreement in accordance with its terms pursuant to SECTIONS 11.1(A), 11.1(C), 11.1(F) or 11.1(H); (iii) the six month anniversary of the valid termination of the Asset Purchase Agreement in accordance with its terms pursuant to SECTION 11.1(B); (iv) the nine month anniversary of the valid termination of the Asset Purchase Agreement in accordance with its terms pursuant to SECTIONS 11(D), 11.1(E) , 11.1(G) or 11.1(I); or (v) such date and time designated by Purchaser in a written notice to each Stockholder. The attorneys and proxies named above, and each of them, are hereby authorized and empowered by the undersigned, at any time prior to the Expiration Time, to act as the undersigned's attorney and proxy to vote the Shares, and to exercise all voting and other rights of the undersigned with respect to the Shares, at every annual, special or adjourned meeting of the stockholders of Company and in every written consent in lieu of such meeting with respect to the following matters: (i) in favor of approval of the adoption of the Asset Purchase Agreement (or any amended version thereof) and the Asset Purchase, (ii) in favor of the name change contemplated by the Asset Purchase Agreement, (iii) in favor of any proposal to adjourn the meeting to solicit additional proxies in favor of the approval of the Asset Purchase Agreement and (iv) against any Acquisition Proposal (including any Superior Proposal) or any other corporate action which would frustrate the purpose of or prevent or delay the consummation of the transactions contemplated by the Asset Purchase Agreement. The attorneys and proxies named above may not exercise this Irrevocable Proxy on any other matter except as provided above. The undersigned stockholder may vote the Shares in its sole discretion on all other matters and may vote any and all other shares of capital stock of the Company or any and all other shares or securities of the Company issued or issuable in respect thereof in its sole discretion on all matters. Any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. [Signature Page Follows] This Irrevocable Proxy is coupled with an interest as aforesaid and is irrevocable. This Irrevocable Proxy may not be amended or otherwise modified without the prior written consent of Purchaser. This Irrevocable Proxy shall be revoked and shall terminate, and be of no further force and effect, automatically upon the Expiration Time. Dated: 10/26/09 Double Black Diamond Offshore Ltd., BY: Carlson Capital, L.P., its investment manager BY: Asgard investment Corp., its general partner (Print Name of Stockholder) /s/ Clint D Carlson ------------------------------------------- (Signature of Stockholder) Clint D. Carlson, President ------------------------------------------- (Print name and title if signing on behalf of an entity) Shares beneficially owned on the date hereof: 4,611,057 shares of Company common stock --------- 0 shares subject to Company Warrants --------- Double Black Diamond Offshore Ltd., BY: Carlson Capital, L.P., its investment manager BY: Asgard investment Corp., its general partner (Print Name of Stockholder) /s/ Clint D Carlson ------------------------------------------- (Signature of Stockholder) Clint D. Carlson, President ------------------------------------------- (Print name and title if signing on behalf of an entity) Shares beneficially owned on the date hereof: 293,806 shares of Company common stock --------- 0 shares subject to Company Warrants --------- -----END PRIVACY-ENHANCED MESSAGE-----