1999 Employee Stock Purchase Plan



 
Exhibit 4.07

 
KANA SOFTWARE, INC. 
1999 EMPLOYEE STOCK PURCHASE PLAN 
 
As Amended and Restated July 31, 2002 
 
I. PURPOSE OF THE PLAN 
 
This Employee Stock Purchase Plan is intended to promote the interests of Kana Software, Inc., a Delaware corporation, by providing eligible employees
with the opportunity to acquire a proprietary interest in the Corporation through participation in a payroll deduction based employee stock purchase plan designed to qualify under Section 423 of the Code. Capitalized terms herein shall have the
meanings assigned to such terms in the attached Appendix. The provisions of the April 26, 2001 restatement of this Plan (the “2001 Restatement”) were approved by the Company’s stockholders on July 3, 2001 and became effective with the
offering period commencing on November 1, 2001. The provisions of the July 31, 2002 restatement of this Plan will become effective with the offering period commencing on November 1, 2002. All share numbers contained herein reflect the two-for-one
stock dividend effected on February 22, 2000 and the ten-for-one reverse stock split effected on December 11, 2001. 
 
II. ADMINISTRATION OF THE PLAN 
 
The Plan Administrator shall have full authority to interpret and construe any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the requirements of Code Section 423. Decisions of the Plan Administrator shall be final and binding on all parties having an interest in the Plan. 
 
III. STOCK SUBJECT TO PLAN 
 
A. The stock purchasable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares of Common Stock purchased on the open market. Subject to the automatic share increase provisions of Section III.B., the total number of shares of Common Stock reserved for issuance
over the term of the Plan shall be limited to 1,529,603 shares (subject to adjustment under subparagraph (B) below). Such share reserve includes (i) the initial share reserve of 100,000 shares, (ii) the January 3, 2000 automatic increase of
45,584 shares, (iii) the January 2, 2001 automatic increase of 66,666 shares, (iv) the increase of 1,000,000 shares authorized by the Board on April 26, 2001 and approved by the stockholders on July 3, 2001, (v) the January 2, 2002 automatic
increase of 45,483 shares, and (vi) the January 2, 2003 automatic increase of 71,870 shares. 
 
B. The number of shares of Common Stock available for issuance under the Plan shall automatically increase on the first trading day of January each calendar year during the term of the Plan, beginning
with calendar year 2000, by an amount equal to three-fourths of one percent (0.75%) of the total number of shares of Common Stock outstanding on the last trading 







 
day in December of the
immediately preceding calendar year, but in no event shall any such annual increase exceed 400,000 shares.1

 
C. Should any change be made to the Common Stock
by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and class of securities issuable under the Plan, (ii) the maximum number and class of securities purchasable per Participant on any one Purchase Date, (iii) the maximum number and class of
securities purchasable in total by all Participants on any one Purchase Date, (iv) the maximum number and/or class of securities by which the share reserve is to increase automatically each calendar year pursuant to the provisions of Section III.B
of this Article One and (v) the number and class of securities and the price per share in effect under each outstanding purchase right in order to prevent the dilution or enlargement of benefits thereunder. 
 
IV. OFFERING PERIODS 
 
A. Shares of Common Stock shall be offered for purchase under
the Plan through a series of overlapping offering periods until such time as (i) the maximum number of shares of Common Stock available for issuance under the Plan shall have been purchased or (ii) the Plan shall have been sooner terminated.

 
B. Each offering period shall be of such
duration (not to exceed twenty-four (24) months) as determined by the Plan Administrator prior to the start date of such offering period. Offering periods shall commence at semi-annual intervals on the first business day of May and on the first
business day of November each year over the term of the Plan. Accordingly, two (2) separate offering periods shall commence in each calendar year the 2001 Restatement remains in existence. However, the initial offering period under the 2001
Restatement shall begin on the first business day in November 2001 and end on the last business day in October 2003. 
 
C. Each offering period shall be comprised of a series of one or more successive Purchase Intervals. Purchase Intervals shall run from the
first business day in May to the last business day in October each year and from the first business day in November each year to the last business day in April in the following year. 
 
D. Should the Fair Market Value per share of Common Stock on any Purchase Date within a particular offering
period be less than the Fair Market Value per share of Common Stock on the start date of that offering period, then the individuals participating in such offering period shall, immediately after the purchase of shares of Common Stock on their behalf
on such Purchase Date, be transferred from that offering period and automatically enrolled in the next offering period commencing after such Purchase Date. 


	1	 	For the 2000 and 2001 calendar years, the annual increase was limited to 66,666 shares. The increase to 400,000 shares became effective for the 2002 calendar year
and each subsequent calendar year. 








V. ELIGIBILITY 
 
A. Each individual who is an Eligible Employee on the start date of any offering period under the Plan may
enter that offering period on such start date. However, an Eligible Employee may participate in only one offering period at a time. 
 
B. Except as otherwise provided in Section IV.D. above, an Eligible Employee must, in order to participate in a particular offering
period, complete the enrollment forms prescribed by the Plan Administrator (including a stock purchase agreement and a payroll deduction authorization) and file such forms with the Plan Administrator (or its designate) on or before the start date of
that offering period. 
 
VI. PAYROLL DEDUCTIONS

 
A. The payroll deduction authorized by the
Participant for purposes of acquiring shares of Common Stock during an offering period may be any multiple of one percent (1%) of the Cash Earnings paid to the Participant during each Purchase Interval within that offering period, up to a maximum of
fifteen percent (15%). The deduction rate so authorized shall continue in effect throughout the offering period, except to the extent such rate is changed in accordance with the following guidelines: 
 
(i) The Participant may, at any time during
the offering period, reduce his or her rate of payroll deduction to become effective as soon as possible after filing the appropriate form with the Plan Administrator. The Participant may not, however, effect more than one (1) such reduction per
Purchase Interval. 
 
(ii) The
Participant may, prior to the commencement of any new Purchase Interval within the offering period, increase the rate of his or her payroll deduction by filing the appropriate form with the Plan Administrator. The new rate (which may not exceed the
fifteen percent (15%) maximum) shall become effective on the start date of the first Purchase Interval following the filing of such form. 
 
B. Payroll deductions shall begin on the first pay day administratively feasible following the start date of the offering period and shall
(unless sooner terminated by the Participant) continue through the pay day ending with or immediately prior to the last day of that offering period. The amounts so collected shall be credited to the Participant’s book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in such account. The amounts collected from the Participant shall not be required to be held in any segregated account or trust fund and may be commingled with the general
assets of the Corporation and used for general corporate purposes. 
 
C. Payroll deductions shall automatically cease upon the termination of the Participant’s purchase right in accordance with the provisions of the Plan. 
 
D. The Participant’s acquisition of Common Stock under the Plan on any Purchase Date shall neither limit
nor require the Participant’s acquisition of Common Stock on any subsequent Purchase Date, whether within the same or a different offering period. 







 
VII. PURCHASE RIGHTS

 
A. Grant of Purchase Rights. A Participant
shall be granted a separate purchase right for each offering period in which he or she participates. The purchase right shall be granted on the start date of the offering period and shall provide the Participant with the right to purchase shares of
Common Stock, in a series of successive installments during that offering period, upon the terms set forth below. The Participant shall execute a stock purchase agreement embodying such terms and such other provisions (not inconsistent with the
Plan) as the Plan Administrator may deem advisable. 
 
Under no circumstances shall purchase rights be granted under the Plan to any Eligible Employee if such individual would, immediately after the grant, own (within the meaning of Code Section 424(d)) or hold outstanding options or
other rights to purchase, stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Corporation or any Corporate Affiliate. 
 
B. Exercise of the Purchase Right. Each purchase right shall be automatically exercised in installments on
each successive Purchase Date within the offering period, and shares of Common Stock shall accordingly be purchased on behalf of each Participant on each such Purchase Date. The purchase shall be effected by applying the Participant’s payroll
deductions for the Purchase Interval ending on such Purchase Date to the purchase of whole shares of Common Stock at the purchase price in effect for the Participant for that Purchase Date. 
 
C. Purchase Price. The purchase price per share at which
Common Stock will be purchased on the Participant’s behalf on each Purchase Date within the particular offering period in which he or she is enrolled shall be equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per
share of Common Stock on the start date of that offering period or (ii) the Fair Market Value per share of Common Stock on that Purchase Date. 
 
D. Number of Purchasable Shares. The number of shares of Common Stock purchasable by a Participant on each Purchase Date during the
particular offering period in which he or she is enrolled shall be the number of whole shares obtained by dividing the amount collected from the Participant through payroll deductions during the Purchase Interval ending with that Purchase Date by
the purchase price in effect for the Participant for that Purchase Date. However, the Plan Administrator shall have the discretionary authority, exercisable prior to the start of any offering period under the Plan, to impose limitations (or to
increase, decrease or remove such limitations) to be in effect for the number of shares purchasable per Participant and in total by all Participants enrolled in that particular offering period on each Purchase Date which occurs during that offering
period. 
 
E. Excess Payroll Deductions. Any
payroll deductions not applied to the purchase of shares of Common Stock on any Purchase Date because they are not sufficient to purchase a whole share of Common Stock shall be held for the purchase of Common Stock on the next Purchase Date in the
same offering period. Any payroll deductions not applied to the purchase of shares on the last Purchase Date in the offering period shall be promptly refunded. Furthermore, any payroll deductions not applied to the purchase of Common Stock by reason
of 







 
the limitation on the maximum
number of shares purchasable per Participant Orin total by all Participants on the Purchase Date shall be promptly refunded. 
 
F. Withdrawal/Termination of Purchase Right. The following provisions shall govern the withdrawal from participation in the Plan and the
termination of outstanding purchase rights: 
 
(i) A Participant may withdraw from the offering period in which he or she is enrolled by filing the appropriate form with the Plan Administrator (or its designate) at any time prior to the next scheduled Purchase Date in that
offering period, and no further payroll deductions under the Plan shall be collected from the Participant with respect to that offering period. Any payroll deductions previously collected during the Purchase Interval in which such withdrawal occurs
shall, at the Participant’s election, be immediately refunded or held for the purchase of shares on the next Purchase Date. If no such election is made at the time of such withdrawal, then the payroll deductions collected from the Participant
with respect to the Purchase Interval in which such withdrawal occurs shall be refunded as soon as possible. 
 
(ii) The Participant’s withdrawal from the offering period shall be irrevocable, and the Participant may not
subsequently rejoin that offering period. In order to resume participation in any subsequent offering period, such individual must re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before the start date of
that offering period. 
 
(iii)
Should the Participant cease to remain an Eligible Employee for any reason (including death, disability or change in status) while his or her purchase right remains outstanding, then that purchase right shall immediately terminate, and all of the
Participant’s payroll deductions for the Purchase Interval in which the purchase right so terminates shall be immediately refunded. However, should the Participant cease to remain in active service by reason of an approved unpaid leave of
absence, then the Participant shall have the right, exercisable up until the last business day of the Purchase Interval in which such leave commences, to (a) withdraw all the payroll deductions collected to date on his or her behalf for that
Purchase Interval or (b) have such funds held for the purchase of shares on his or her behalf on the next scheduled Purchase Date. In no event, however, shall any further payroll deductions be collected on the Participant’s behalf during such
leave. Upon the Participant’s return to active service (x) within ninety (90) days following the commencement of such leave or (y) prior to the expiration of any longer period for which such Participant’s right to reemployment with the
Corporation is guaranteed by statute or contract, his or her payroll deductions under the Plan shall automatically resume at the rate in effect at the time the leave began, unless the Participant withdraws from the Plan prior to his or her return.
An individual who returns to active employment following a leave of absence which exceeds in duration the applicable (x) or (y) time period will be treated as a new Employee for purposes of subsequent participation in the Plan and must accordingly
re-enroll in the Plan (by making a timely filing of the prescribed enrollment forms) on or before the start date of any subsequent offering period in which he or she wishes to participate. 







 
G. Change in
Control. Each outstanding purchase right shall automatically be exercised, immediately prior to the effective date of any Change in Control, by applying the payroll deductions of each Participant for the Purchase Interval in which such Change in
Control occurs to the purchase of whole shares of Common Stock at a purchase price per share for each Participant equal to eighty-five percent (85%) of the lower of (i) the Fair Market Value per share of Common Stock on the start date of the
particular offering period in which the Participant is enrolled at the time such Change in Control occurs or (ii) the Fair Market Value per share of Common Stock immediately prior to the effective date of such Change in Control. However, the
applicable limitation on the number of shares of Common Stock purchasable per Participant shall continue to apply to any such purchase, but not the limitation applicable to the maximum number of shares of Common Stock purchasable in total by all
Participants on any one Purchase Date. 
 
The
Corporation shall use its best efforts to provide at least ten (10)-days prior written notice of the occurrence of any Change in Control, and Participants shall, following the receipt of such notice, have the right to terminate their outstanding
purchase rights prior to the effective date of the Change in Control. 
 
H. Proration of Purchase Rights. Should the total number of shares of Common Stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under
the Plan, the Plan Administrator shall make a pro-rata allocation of the available shares on a uniform and nondiscriminatory basis, and the payroll deductions of each Participant, to the extent in excess of the aggregate purchase price payable for
the Common Stock pro-rated to such individual, shall be refunded. 
 
I. Assignability. The purchase right shall be exercisable only by the Participant and shall not be assignable or transferable by the Participant. 
 
J. Stockholder Rights. A Participant shall have no stockholder rights with respect to the shares subject to
his or her outstanding purchase right until the shares are purchased on the Participant’s behalf in accordance with the provisions of the Plan and the Participant has become a holder of record of the purchased shares. 
 
VIII. ACCRUAL LIMITATIONS 
 
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan if and to the extent such accrual, when aggregated with (i) rights to purchase Common Stock accrued under any other purchase right granted under this Plan and (ii)
similar rights accrued under other employee stock purchase plans (within the meaning of Code Section 423)) of the Corporation or any Corporate Affiliate, would otherwise permit such Participant to purchase more than Twenty-Five Thousand Dollars
($25,000.00) worth of stock of the Corporation or any Corporate Affiliate (determined on the basis of the Fair Market Value per share on the date or dates such rights are granted) for each calendar year such rights are at anytime outstanding.

 
B. For purposes of applying such accrual
limitations to the purchase rights granted under the Plan, the following provisions shall be in effect: 







 
(i) The right to acquire Common Stock under each outstanding purchase right shall accrue in a series of installments on each successive Purchase Date during the offering period on which such right remains outstanding. 
 
(ii) No right to acquire Common Stock under
any outstanding purchase right shall accrue to the extent the Participant has already accrued in the same calendar year the right to acquire Common Stock under one or more other purchase rights at a rate equal to Twenty-Five Thousand Dollars
($25,000.00) worth of Common Stock (determined on the basis of the Fair Market Value per share on the date or dates of grant) for each calendar year such rights were at any time outstanding. 
 
C. If by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular Purchase Interval, then the payroll deductions which the Participant made during that Purchase Interval with respect to such purchase right shall be promptly refunded. 
 
D. In the event there is any conflict between the provisions
of this Article and one or more provisions of the Plan or any instrument issued thereunder, the provisions of this Article shall be controlling. 
 
IX. EFFECTIVE DATE AND TERM OF THE PLAN 
 
A. The Plan was adopted by the Board on July 7, 1999, approved by the sole stockholder on August 16, 1999, and became effective at the
Effective Time, September 21, 1999. 
 
B. The Plan
was amended and restated by the 2001 Restatement to effect the following changes to the Plan: (i) increase the number of shares of Common Stock authorized for issuance over the term of the Plan by an additional 1,000,000 shares, (ii) increase the
limit on the maximum number of shares by which the share reserve under the Plan may automatically increase each calendar year, beginning with the 2002 calendar year, from 66,666 shares to 400,000 shares, (iii) implement a series of overlapping
twenty-four (24)-month offering periods beginning at semi-annual intervals each year, (iv) establish a series of semi-annual purchase dates within each such offering period, (v) increase the maximum number of shares of Common Stock purchasable in
total by all Participants on any one Purchase Date from 25,000 shares to 100,000 shares and (vi) revise certain provisions of the Plan document in order to facilitate administration of the Plan. 
 
C. The Plan was amended and restated on July 31, 2002 to (i)
remove the limitation on the maximum number of shares purchasable per Participant on any one Purchase Date, and (ii) remove the limitation on the maximum number of shares purchasable by all Participants on any one Purchase Date. 
 
D. Unless sooner terminated by the Board, the Plan shall
terminate upon the earliest of (i) the last business day in October 2009, (ii) the date on which all shares available for issuance under the Plan shall have been sold pursuant to purchase rights exercised under the Plan or (iii) the date on which
all purchase rights are exercised in connection with a Change in 







 
Control. No further purchase
rights shall be granted or exercised, and no further payroll deductions shall be collected, under the Plan following such termination. 
 
X. AMENDMENT OF THE PLAN 
 
A. The Board may alter, amend, suspend or terminate the Plan at any time to become effective immediately following the close of any
Purchase Interval. However, the Plan may be amended or terminated immediately upon Board action, if and to the extent necessary to assure that the Corporation will not recognize, for financial reporting purposes, any compensation expense in
connection with the shares of Common Stock offered for purchase under the Plan, should the financial accounting rules applicable to the Plan at the Effective Time be subsequently revised so as to require the Corporation to recognize compensation
expense in the absence of such amendment or termination. 
 
B. In no event may the Board effect any of the following amendments or revisions to the Plan without the approval of the Corporation’s stockholders:(i) increase the number of shares of Common Stock issuable under the Plan,
except for permissible adjustments in the event of certain changes in the Corporation’s capitalization, (ii) alter the purchase price formula so as to reduce the purchase price payable for the shares of Common Stock purchasable under the Plan
or (iii) modify the eligibility requirements for participation in the Plan. 
 
XI. GENERAL PROVISIONS 
 
A. All costs and expenses incurred in the administration of the Plan shall be paid by the Corporation; however, each Plan Participant shall bear all costs and expenses incurred by such individual in the sale or other disposition of
any shares purchased under the Plan. 
 
B. Nothing
in the Plan shall confer upon the Participant any right to continue in the employ of the Corporation or any Corporate Affiliate for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or
any Corporate Affiliate employing such person) or of the Participant, which rights are hereby expressly reserved by each, to terminate such person’s employment at any time for any reason, with or without cause. 
 
C. The provisions of the Plan shall be governed by the laws of
the State of California without resort to that State’s conflict-of-laws rules. 
 







 
SCHEDULE A

 
CORPORATIONS PARTICIPATING IN

EMPLOYEE STOCK PURCHASE PLAN 
AS OF THE EFFECTIVE TIME 
 
Kana Software, Inc. 
 







 
APPENDIX

 
The following definitions shall be in effect
under the Plan: 
 
A. Board shall mean the
Corporation’s Board of Directors. 
 
B. Cash
Earnings shall mean the (i) regular base salary paid to a Participant by one or more Participating Companies during such individual’s period of participation in one or more offering periods under the Plan plus(ii) all overtime payments,
bonuses, commissions, profit-sharing distributions and other incentive-type payments received during such period. Such Cash Earnings shall be calculated before deduction of (A) any income or employment tax withholdings or (B) any contributions made
by the Participant to any Code Section 401(k) salary deferral plan or Code Section 125 cafeteria benefit program now or hereafter established by the Corporation or any Corporate Affiliate. However, Cash Earnings shall not include any contributions
made on the Participant’s behalf by the Corporation or any Corporate Affiliate to any employee benefit or welfare plan now or hereafter established (other than Code Section 401(k) or Code Section 125 contributions deducted from such Cash
Earnings). 
 
C. Change in Control shall mean a
change in ownership of the Corporation pursuant to any of the following transactions: 
 
(i) a merger or consolidation in which securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or 
 
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the
Corporation in complete liquidation or dissolution of the Corporation, or 
 
(iii) the acquisition, directly or indirectly, by a person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by or is under common
control with the Corporation) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation’s stockholders. 
 
D. Code shall mean the Internal Revenue Code of 1986, as amended. 
 
E. Common Stock shall mean the Corporation’s common stock, $0.001 par value. 
 
F. Corporate Affiliate shall mean any parent or subsidiary
corporation of the Corporation (as determined in accordance with Code Section 424), whether now existing or subsequently established. 
 
G. Corporation shall mean Kana Software, Inc., a Delaware corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Kana Software, Inc. which shall by appropriate action adopt the Plan. 







 
H. Effective
Time shall mean the time at which the Underwriting Agreement for the initial public offering of the Common Stock was executed and finally priced. Any Corporate Affiliate which becomes a Participating Corporation after such Effective Time shall
designate a subsequent Effective Time with respect to its employee-Participants. 
 
I. Eligible Employee shall mean any person who is employed by a Participating Corporation on a basis under which he or she is regularly expected to render more than twenty (20) hours of service per
week for more than five (5) months per calendar year for earnings considered wages under Code Section 3401 (a). 
 
J. Fair Market Value per share of Common Stock on any relevant valuation date shall be determined in accordance with the following
provisions: 
 
(i) If the Common
Stock is at the time traded on the Nasdaq National Market, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question, as such price is reported by the National Association of Securities Dealers
on the Nasdaq National Market and published in The Wall Street Journal. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for
which such quotation exists. 
 
(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange and published in The Wall Street Journal. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists. 
 
K. 1933 Act shall mean the Securities Act of 1933, as amended. 
 
L. Participant shall mean any Eligible Employee of a Participating Corporation who is actively participating
in the Plan. 
 
M. Participating Corporation shall
mean the Corporation and such Corporate Affiliate or Affiliates as may be authorized from time to time by the Board to extend the benefits of the Plan to their Eligible Employees. The Participating Corporations in the Plan are listed in attached
Schedule A. 
 
N. Plan shall mean the
Corporation’s 1999 Employee Stock Purchase Plan, asset forth in this document. 
 
O. Plan Administrator shall mean the committee of two (2) or more Board members appointed by the Board to administer the Plan. 
 
P. Purchase Date shall mean the last business day of each Purchase Interval. The initial Purchase Date shall
be April 30, 2002. 







 
Q. Purchase
Interval shall mean each successive six (6)-month period within a particular offering period at the end of which there shall be purchased shares of Common Stock on behalf of each Participant. 
 
R. Stock Exchange shall mean either the American Stock
Exchange or the New York Stock Exchange. 
 
S.
Underwriting Agreement shall mean the agreement between the Corporation and the underwriter or underwriters that managed the initial public offering of the Common Stock.