SC 13D/A

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

_____________________

SCHEDULE 13D

Under the Securities Exchange Act of 1934

Amendment No. 5(*)

KANA SOFTWARE, INC.

(Name of Issuer)

COMMON STOCK, $.001 PAR VALUE

(Title of Class of Securities)

483600102

(CUSIP Number)

JOHN F. NEMELKA

NIGHTWATCH CAPITAL MANAGEMENT, LLC

5314 RIVER RUN DRIVE, SUITE 350

PROVO, UTAH  84604

TELEPHONE:  (801) 805-1300

(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 which 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  £.

NOTE:  Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See Rule 13d-7(b) for other parties to whom copies are to be sent.

*             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 the disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed to be “filed” for purposes 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).

13D

CUSIP No. 483600102

(1)	NAME OF REPORTING PERSON S.S. OR  I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
	NightWatch Capital Management, LLC
(2)	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP **
			(a)  o
			(b)  x
(3)	SEC USE ONLY
(4)	SOURCE OF FUNDS **
	WC
(5)	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)		o
(6)	CITIZENSHIP OR PLACE OF ORGANIZATION
	Delaware
	(7)	SOLE VOTING POWER
		1,595,452
NUMBER OF
SHARES	(8)	SHARED VOTING POWER
BENEFICIALLY		0
OWNED BY
EACH	(9)	SOLE DISPOSITIVE POWER
REPORTING		1,595,452
PERSON
WITH	(10)	SHARED DISPOSITIVE POWER
		0
(11)	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
	1,595,452
(12)	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES **		o
(13)	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
	3.9%
(14)	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS)
	OO

**  SEE INSTRUCTIONS BEFORE FILLING OUT!

This Amendment No. 5 (this “Amendment”) amends the statement on Schedule 13D filed on April 29, 2005, as amended by Amendment No. 1 filed on July 11, 2005, Amendment No. 2 filed on October 11, 2005, Amendment No. 3 filed on January 27, 2006 and Amendment No. 4 filed on May 22, 2007 (as so amended, the “Schedule 13D”), with respect to shares of common stock, par value $.001 per share (the “Common Stock”) of Kana Software, Inc., a Delaware corporation (the “Company”).  Capitalized terms used and not otherwise defined in this Amendment have the meanings set forth in the Schedule 13D.  This Amendment amends the Schedule 13D as specifically set forth herein.

This is a final amendment to the Schedule 13D and an exit filing for the Reporting Person.

ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION

Item 3 is hereby amended and restated in its entirety as follows:

The NW Funds purchased an aggregate of 1,519,847 shares of Common Stock in a series of transactions between July 8, 2004, and April 22, 2005. The aggregate purchase price for such shares of Common Stock was approximately $2.4 million. On June 30, 2005 (the “June 30 Transaction”), the NW Funds purchased in the aggregate (i) an additional 1,359,618 shares of Common Stock, bringing their total holdings to 2,879,465 shares of Common Stock and (ii) warrants (as amended), which may be exercised during the period commencing on March 28, 2006 and expiring on September 29, 2010, to purchase an additional 679,808 shares of Common Stock. The aggregate purchase price paid in the June 30 Transaction for such shares of Common Stock and such warrants was $2 million. On September 29, 2005 (the “September 29 Transaction”), the NW Funds purchased in the aggregate (i) an additional 2,189,006 shares of Common Stock, bringing their total holdings to 5,068,471 shares of Common Stock and (ii) warrants, which may be exercised during the period commencing on March 28, 2006, and expiring on September 29, 2010, to purchase an additional 788,042 shares of Common Stock. The aggregate purchase price paid in the September 29 Transaction for such shares of Common Stock and such warrants was $3,333,200.  On October 25, 2005 (the “October 25 Transaction”), the NW Funds acquired in the aggregate (i) 354,451 shares of Common Stock, bringing their total holdings to 5,422,922 shares of Common Stock and (ii) warrants, which may be exercised during the period commencing April 24, 2006, and expiring on October 25, 2010, to purchase an additional 127,603 shares of Common Stock.  The warrants and Common Stock to which the October 25 Transaction relates were originally purchased as part of units, pursuant to a Stock Purchase Agreement (the “Agreement”), for $1.5227 per unit.   Pursuant to the terms of the Agreement, the shares of Common Stock and warrants acquired on October 25, 2005, were issued in order to bring the units purchased pursuant to the Agreement to an adjusted price of $1.3105 per unit.  On May 8, 2006 (the “May 8 Transaction”), the NW Funds acquired in the aggregate 494,866 shares of Common Stock, bringing their total holdings to 5,917,788 shares of Common Stock.  The shares of Common Stock to which the May 8 Transaction relates were issued in connection with, and as compensation for, certain amendments to the Agreement.  On October 9, 2006 (the “October 9 Transaction”), the NW Funds acquired in the aggregate 49,485 shares of Common Stock, bringing their total holdings to 5,967,273 shares of Common Stock.  The shares of Common Stock to which the October 9 Transaction relates were issued in connection with, and as compensation for, certain amendments to the Agreement.  In December 2006, in connection with an internal restructuring, NWCP transferred to NWCP II 100% of its holdings of shares of Common Stock and warrants.  In a series of transactions between May 11, 2007, and May 16, 2007 (the “May 11 Transaction”), a separate account managed by NWCA (the “Account”) purchased 350,000 shares of Common Stock, bringing the total number of shares of Common Stock associated with the Item 2 Persons to 6,317,273 shares of Common Stock and warrants to purchase an additional 1,595,452 shares of Common Stock.  The aggregate purchase price paid in the May 11 Transaction for such shares of Common Stock was $1,128,771.

 
 

On October 26, 2009, the Company and the NW Funds entered into an agreement to amend the warrants issued to the NW Funds on September 29, 2005 and October 25, 2005.  In consideration of the NW Funds waiving their right to cause the warrants to become exercisable for shares of common stock of the purchaser of the Company’s assets (instead of shares of Common Stock) in connection with the transaction described in the Issuer Agreement (as defined below), the agreement extended the exercise period for such warrants by an additional two years, such that the warrants dated September 29, 2005 will expire on September 29, 2012 and the warrants dated October 25, 2005 will expire on October 25, 2012. In addition, such warrants were amended to change their treatment in the event of an all-cash asset sale or merger of the Company, such that if substantially all of the Company’s assets are sold for cash, the warrants will remain outstanding on the same terms and conditions and will not be assumed by the purchaser of the Company’s assets, and if the Company is acquired by means of an all-cash merger, the warrants will become exercisable for the merger consideration upon consummation of the merger transaction.  As noted above, all such warrants are currently held by NWCP II.

The source of funds for all of the above-described purchase transactions was working capital of the NW Funds and the Account. The shares of Common Stock were held in prime brokerage accounts of the NW Funds and the Account, which may from time to time have debit balances. Because other securities are held in such accounts, it is not possible to determine the amounts, if any, of financing used at any time with respect to the shares of Common Stock.

ITEM 4. PURPOSE OF TRANSACTION

Item 4 is hereby amended by inserting the following paragraph at the end thereof:

On October 26, 2009 (the “October 26 Transaction”), NWCP II entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) by and among NWCP II, Black Diamond Offshore Ltd. (“BDO”) and Double Black Diamond Offshore Ltd. (“DBDO,” and, together with BDO, the “Purchasers”) whereby NWCP II agreed to sell 5,705,814 shares of Common Stock to the Purchasers for a purchase price equal to (a) $0.75 per share, to be paid upon execution of the Stock Purchase Agreement (the “Initial Payment”), (b) within two business days following the consummation of transactions contemplated by an Asset Purchase Agreement entered into by and among the Company and Kay Technology Corp, Inc. on October 26, 2009 (the “Issuer Agreement”), an additional amount per share based on the net cash per share of the Company as of the closing of the Issuer Agreement less $0.79 per share and (iii) within 160 days following the closing of the Issuer Agreement, an additional amount of net cash per share representing the favorable resolution of escrow agreements under the Issuer Agreement.  A copy of the Stock Purchase Agreement is attached hereto as Exhibit 99.1 and incorporated herein by reference.

On October 28, 2009 (the “October 28 Transaction”), NWCP II distributed 611,459 shares of Common Stock to a limited partner of NWCP II (the “NWCP II LP”) as a distribution in-kind.  In connection with such distribution in-kind, NWCP II expects to distribute on or about November 4, 2009, approximately 163,484 warrants to the NWCP II LP, following which distribution the total number of warrants to purchase shares of Common Stock associated with Item 2 Persons will be approximately 1,431,968.

Following the October 26 Transaction and the October 28 Transaction, all 6,317,273 shares of Common Stock associated with Item 2 Persons have been sold or distributed.

ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.

The first paragraph of Item 5 is hereby amended and restated in its entirety as follows:

(a)-(b)   The securities referenced in this statement (the “Securities”) consist of  warrants to acquire 1,595,452 shares of Common Stock exercisable as of March 28, 2006 and April 24, 2006, representing in the aggregate beneficial ownership of 1,595,452 Common Shares or approximately 3.9% of the 41,215,661 shares of Common Stock represented by the Company to be outstanding as of October 26, 2009.1

1The calculation of total shares of Common Stock of the Company outstanding is based upon the Company’s most recent filing on Form 8-K, filed October 27, 2009.

Item 5(e) is hereby amended and restated in its entirety as follows:

(e)     October 28, 2009

ANNEX A:

Annex A is hereby amended and restated in its entirety as attached hereto.

ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.

Item 6 is hereby amended and restated in its entirety as follows:

The disclosure in Item 4 above is incorporated herein by reference.

ITEM 7. Material to be Filed as Exhibits.

Item 7 is hereby amended and restated in its entirety as follows:

99.1           Stock Purchase Agreement by and among NightWatch Capital Partners II, L.P., Black Diamond Offshore Ltd. and Double Black Diamond Offshore Ltd.

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I hereby certify that the information set forth in this Schedule 13D is true, complete and correct.

Dated:  November 2, 2009

NIGHTWATCH CAPITAL MANAGEMENT, LLC
By:	/s/ Paul V. Burgon
Name:	Paul V. Burgon
Title:	Principal

Annex A

Item 2 Person	Buy/Sell	Date	Number of Shares	Price per Share
NightWatch Capital Management, LLC	sell	10/26/2009	5,705,814	See Item 4
NightWatch Capital Management, LLC	In-kind distribution	10/28/2009	611,459	See Item 4
Total			6,317,273

EX-99.1

Exhibit 99.1

Execution Copy

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 26th day of October, 2009, by and between NightWatch 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;

(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 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.

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(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 (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.

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(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.

2.7           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:

 

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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 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 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.

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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 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.

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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 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).

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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).

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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.

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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, 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.

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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 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.

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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.

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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 Carlson
	Name: Clint 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 Carlson
	Name: Clint Carlson
	Title: President
NightWatch Capital Partners II, LP
By:	/s/ John F. Nemelka
	Name: 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.

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