Exhibit (d)(3)
KANA COMMUNICATIONS, INC.
1999 STOCK INCENTIVE PLAN
FORM OF RESTRICTED STOCK ISSUANCE AGREEMENT
KANA COMMUNICATIONS, INC.
RESTRICTED STOCK ISSUANCE AGREEMENT
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AGREEMENT made this _____ day of ______________, by and between Kana
Communications, Inc., a Delaware corporation, and _________________________, a
Participant in the Corporation's 1999 Stock Incentive Plan.
All capitalized terms in this Agreement shall have the meaning assigned to
them in this Agreement or in the attached Appendix.
A. ISSUANCE OF SHARES
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1. Issuance. Participant will be issued _____________ unvested shares of
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Common Stock (the "Issued Shares") pursuant to the provisions of the Stock
Issuance Program upon payment to the Corporation of the $0.001 per share par
value. The Issued Shares shall be issued under the Plan.
2. Assignment. Concurrently with the delivery of this Agreement to the
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Corporation, together with payment of the per share par value of the Issued
Shares, the Participant shall also deliver a duly executed blank Assignment
Separate from Certificate (in the form attached hereto as Exhibit I) with
respect to the Issued Shares.
3. Stockholder Rights. Until such time as the Issued Shares may be
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forfeited pursuant to the provisions of Paragraph C.2, the Participant (or any
successor in interest) shall have all the rights of a stockholder (including
voting, dividend and liquidation rights) with respect to the Issued Shares,
subject, however, to the transfer restrictions of this Agreement .
4. Escrow. The Corporation shall hold the Issued Shares in escrow until
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those shares have vested in accordance with the Vesting Schedule. The Issued
Shares which so vest shall be released from escrow upon the Participant's
payment to the Corporation of the federal and state income and employment
withholding taxes to which the Participant becomes subject by reason of his or
her vesting in the Issued Shares.
5. Compliance with Law. Under no circumstances shall shares of Common
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Stock or other assets be issued or delivered to Participant pursuant to the
provisions of this Agreement unless, in the opinion of counsel for the
Corporation or its successors, there shall have been compliance with all
applicable requirements of Federal and state securities laws, all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which the Common Stock is at the time listed for trading and all
other requirements of law or of any regulatory bodies having jurisdiction over
such issuance and delivery.
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B. TRANSFER RESTRICTIONS
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1. Restriction on Transfer. Except for any Permitted Transfer,
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Participant shall not transfer, assign, encumber or otherwise dispose of any of
the Issued Shares which are subject to the forfeiture provisions of Paragraph
C.2.
2. Restrictive Legend. The stock certificate for the Issued Shares
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shall be endorsed with the following restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND SUBJECT TO
CERTAIN FORFEITURE PROVISIONS AND TRANSFER RESTRICTIONS AND MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF
EXCEPT IN CONFORMITY WITH THE TERMS OF A WRITTEN AGREEMENT DATED
____________, 2001 BETWEEN THE CORPORATION AND THE REGISTERED HOLDER OF THE
SHARES (OR THE PREDECESSOR IN INTEREST TO THE SHARES). A COPY OF SUCH
AGREEMENT IS MAINTAINED AT THE CORPORATION'S PRINCIPAL CORPORATE OFFICES."
3. Transferee Obligations. Each person (other than the Corporation) to
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whom the Issued Shares are transferred by means of a Permitted Transfer must, as
a condition precedent to the validity of such transfer, acknowledge in writing
to the Corporation that such person is bound by the provisions of this Agreement
and that the transferred shares are subject to the forfeiture provisions of
Paragraph C.2 to the same extent such shares would be so subject if retained by
Participant.
C. VESTING/FORFEITURE OF THE ISSUED SHARES
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1. Vesting. The Issued Shares shall initially be unvested and subject
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to forfeiture in accordance with the provisions of Paragraph C.2. The following
Vesting Schedule shall be in effect for the Issued Shares:
Upon the Participant's completion of six (6) months of Service measured
from ______________________, 2001, the Participant shall acquire a fully-
vested interest in, and the forfeiture provisions of Paragraph C.2. shall
terminate and lapse with respect to, the Issued Shares.
2. Forfeiture of Issued Shares. Should Participant cease Service for
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any reason prior to the completion of the Vesting Schedule, then all of the
Issued Shares in which Participant is not, at the time of his or her cessation
of Service, vested in accordance with the special vesting acceleration
provisions of Paragraph C.4 of this Agreement shall be immediately forfeited and
the stock certificates for those Issued Shares immediately cancelled, without
any cash or other payment due from the Corporation with respect to the forfeited
Issued Shares, and Participant shall no longer be entitled to any rights as a
stockholder with respect to those shares or to any other entitlement or interest
with respect to such shares.
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3. Recapitalization. Any new, substituted or additional securities or
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other property (including cash paid other than as a regular cash dividend) which
is by reason of any Recapitalization distributed with respect to the Issued
Shares shall be immediately subject to the forfeiture provisions of Paragraph
C.2 and the escrow requirements hereunder, but only to the extent the Issued
Shares are at the time covered by such right or escrow requirements. Appropriate
adjustments to reflect such distribution shall be made to the number and/or
class of securities subject to this Agreement in order to reflect the effect of
any such Recapitalization upon the Corporation's capital structure.
4. Corporate Transaction. Should a Corporate Transaction occur during
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Participant's period of Service and Participant not be offered continued
employment by the Corporation or any successor entity, then the forfeiture
provisions of Paragraph C.2 shall lapse in their entirety, and the Issued Shares
shall vest in full.
D. SPECIAL TAX ELECTION
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1. Section 83(b) Election. Under Code Section 83, the excess of the
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fair market value of the Issued Shares on the date any forfeiture restrictions
applicable to such shares lapse over the par value paid for such shares will be
reportable as ordinary income on the lapse date. For this purpose, the term
"forfeiture restrictions" includes the forfeiture provisions contained in
Paragraph C.2. Participant may elect under Code Section 83(b) to be taxed at the
time the Issued Shares are acquired, rather than when and as such Issued Shares
cease to be subject to those forfeiture restrictions. Such election must be
filed with the Internal Revenue Service within thirty (30) days after the date
of this Agreement. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II
HERETO. PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE
APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY
INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.
2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS
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PARTICIPANT'S SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY
ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.
E. GENERAL PROVISIONS
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1. At Will Employment. Nothing in this Agreement or in the Plan shall
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confer upon Participant any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Corporation (or any Parent or Subsidiary employing or retaining
Participant) or of Participant, which rights are hereby expressly reserved by
each, to terminate Participant's Service at any time for any reason, with or
without cause.
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2. Notices. Any notice required to be given under this Agreement shall
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be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
3. No Waiver. No waiver of any breach or condition of this Agreement
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shall be deemed to be a waiver of any other or subsequent breach or condition,
whether of like or different nature.
4. Cancellation of Shares. Should the forfeiture provision contained
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in Paragraph C.2 become applicable in connection with the Participant's
termination of Service, then from and after that time, the person from whom such
shares are to be forfeited shall no longer have any rights as a holder of such
shares. Such shares shall be deemed forfeited in accordance with the applicable
provisions hereof, and the Corporation shall be deemed the owner and holder of
such shares, whether or not the certificates therefor have been delivered to the
Corporation.
5. Participant Undertaking. Participant hereby agrees to take whatever
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additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Participant or the Issued Shares
pursuant to the provisions of this Agreement.
6. Agreement is Entire Contract. This Agreement constitutes the entire
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contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the terms of the Plan.
7. Governing Law. This Agreement shall be governed by, and construed
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in accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
8. Counterparts. This Agreement may be executed in counterparts, each
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of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
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9. Successors and Assigns. The provisions of this Agreement shall
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inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and upon Participant, Participant's assigns and the legal
representatives, heirs and legatees of Participant's estate, whether or not any
such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first indicated above.
KANA COMMUNICATIONS, INC.
By:___________________________________
Title:________________________________
Address:______________________________
______________________________________
PARTICIPANT
______________________________________
Signature
Address:______________________________
______________________________________
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EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _______________________ hereby sell(s), assign(s) and
transfer(s) unto Kana Communications, Inc. (the "Corporation"),
_____________________ (________) shares of the Common Stock of the Corporation
standing in his or her name on the books of the Corporation represented by
Certificate No. ______________ herewith and do(es) hereby irrevocably constitute
and appoint ______________________________ Attorney to transfer the said stock
on the books of the Corporation with full power of substitution in the premises.
Dated: _________________,_____.
Signature _____________________________________
Instruction: Please do not fill in any blanks other than the signature line.
Please sign exactly as you would like your name to appear on the issued stock
certificate. The purpose of this assignment is to enable the Corporation to
enforce the forfeiture provisions of Paragraph C.2 of the Stock Issuance
Agreement without requiring additional signatures on the part of Participant.
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
____________ shares of the common stock of Kana Communications, Inc.
(3) The property was issued on _________________, 2001.
(4) The taxable year in which the election is being made is the calendar year
2001.
(5) The property is subject to forfeiture, without the receipt of any
consideration by the taxpayer, if for any reason taxpayer's service with
the issuer terminates prior to __________________, 2001.
(6) The fair market value at the time of transfer (determined without regard to
any restriction other than a restriction which by its terms will never
lapse) is $________ per share.
(7) The amount paid for such property is $0.001 per share.
(8) A copy of this statement was furnished to Kana Communications, Inc. for
whom taxpayer rendered the services underlying the transfer of property.
(9) This statement is executed on ________________________, 2001.
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Spouse (if any) Taxpayer
This election must be filed with the Internal Revenue Service Center with
which taxpayer files his or her Federal income tax returns and must be made
within thirty (30) days after the execution date of the Stock Issuance
Agreement. This filing should be made by registered or certified mail, return
receipt requested. Participant must retain two (2) copies of the completed form
for filing with his or her Federal and state tax returns for the current tax
year and an additional copy for his or her records.
APPENDIX
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The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Restricted Stock Issuance Agreement.
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B. Board shall mean the Corporation's Board of Directors .
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C. Code shall mean the Internal Revenue Code of 1986, as amended.
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D. Common Stock shall mean shares of the Corporation's common stock.
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E. Corporate Transaction shall mean either of the following stockholder-
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approved 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 Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. Corporation shall mean Kana Communications, Inc., a Delaware
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corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Kana Communications, Inc.
G. Owner shall mean Participant and all subsequent holders of the Issued
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Shares who derive their chain of ownership through a Permitted Transfer from
Participant.
H. Parent shall mean any corporation (other than the Corporation) in an
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unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
I. Participant shall mean the person to whom the Issued Shares are issued
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under the Stock Issuance Program.
J. Permitted Transfer shall mean (i) a gratuitous transfer of the Issued
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Shares, provided and only if Participant obtains the Corporation's prior written
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consent to such transfer, (ii) a transfer of title to the Issued Shares effected
pursuant to Participant's will or the laws of inheritance following
Participant's death or (iii) a transfer to the Corporation in pledge as security
for any purchase-money indebtedness incurred by Participant in connection with
the acquisition of the Issued Shares.
K. Plan shall mean the Corporation's 1999 Stock Incentive Plan.
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L. Plan Administrator shall mean either the Board or a committee of the
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Board acting in its administrative capacity under the Plan.
M. Issued Shares shall have the meaning assigned to such term in Paragraph
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A.1.
N. Recapitalization shall mean any stock split, stock dividend,
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recapitalization, combination of shares, exchange of shares or other change
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.
O. Service shall mean the Participant's performance of services for the
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Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or an independent consultant.
P. Subsidiary shall mean any corporation (other than the Corporation) in
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an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
Q. Vesting Schedule shall mean the vesting schedule specified in Paragraph
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C.1, pursuant to which the Issued Shares are to vest upon Participant's
completion of a specified period of Service.
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