CUSIP NO. 1113OR100 13D Page 1 of 11 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
Under the Securities Exchange Act of 1934
Broadbase Software, Inc.
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(Name of Issuer)
Common Stock, $0.001 Par Value
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(Title of Class of Securities)
1113OR100
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(CUSIP Number)
David K. Michaels, Esq. David A. Makarechian, Esq.
Fenwick & West LLP Brobeck, Phleger & Harrison LLP
Two Palo Alto Square Two Embarcadero Place, 2200 Geng Road
Palo Alto, CA 94306 Palo Alto, CA 94303
(650) 494-0600 (650) 424-0160
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
April 9, 2001
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(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.
(Continued on following pages)
CUSIP NO. 1113OR100 13D Page 2 of 11 Pages
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1 NAMES OF REPORTING PERSONS
Kana Communications, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
I.R.S. Identification No. 77-0435679
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of Delaware
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7 SOLE VOTING POWER
NUMBER
OF 16,330,708 (acquisition of such shares is conditioned upon the occurrence
of certain events specified in the company stock option agreement, dated
April 9, 2001, by and between Kana and Broadbase and incorporated by
reference as Exhibit 3 to this Schedule 13D)
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SHARES 8 SHARED VOTING POWER
BENEFICIALLY
9,845,583 (pursuant to company voting agreements and irrevocable proxies,
dated April 9, 2001, by and between Kana and certain directors, executive
officers and affiliates thereof of Broadbase and incorporated by reference
as Exhibit 2 to this Schedule 13D and including shares issuable upon
exercise of options exercisable within 60 days of April 9, 2001)
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OWNED BY 9 SOLE DISPOSITIVE POWER
REPORTING
16,330,708 (acquisition of such shares is conditioned upon the occurrence
of certain events specified in the company stock option agreement, dated
April 9, 2001, by and between Kana and Broadbase and incorporated by
reference as Exhibit 3 to this Schedule 13D)
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PERSON WITH 10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
26,176,291 (including shares issuable upon exercise of options
exercisable within 60 days of April 9, 2001)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
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CUSIP NO. 1113OR100 13D Page 3 of 11 Pages
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
11.7% (based on the number of shares of Broadbase's common stock
outstanding as of April 9, 2001 as represented by Broadbase in the
agreement and plan of merger, dated April 9, 2001, by and among Kana,
Arrow Acquisition Corp. and Broadbase and incorporated by reference as
Exhibit 1 to this Schedule 13D)
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT
Neither the filing of this Schedule 13D nor any of its contents shall be deemed
to constitute an admission by Kana Communications, Inc. that it is the
beneficial owner of any of the common stock of Broadbase Software Inc. referred
to herein for purposes of Section 13(d) of the Securities Exchange Act of 1934,
as amended, or for any other purpose, and such beneficial ownership is expressly
disclaimed.
CUSIP NO. 1113OR100 13D Page 4 of 11 Pages
Item 1. Security and Issuer.
This statement on Schedule 13D relates to the common stock, par value
$0.001 per share, of Broadbase Software, Inc., a Delaware corporation.
Broadbase's principal executive offices are located at 181 Constitution Drive,
Menlo Park, CA 94025.
Item 2. Identity and Background.
(a) The name of the person filing this statement is Kana Communications,
Inc., a Delaware corporation.
(b) The address of the principal office and principal business of Kana is
740 Bay Road, Redwood City, CA 94063.
(c) Kana develops, markets and supports customer communication software
products and services for e-Businesses. Set forth in Schedule A is the name and
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present principle occupation or employment and the name, principal business and
address of any corporation or other organization in which such employment is
conducted, of each of Kana's directors and executive officers, as of the date
hereof. Schedule A also sets forth information regarding certain persons who,
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because of their representation on Kana's board of directors or because they may
be deemed to beneficially own more than ten percent of Kana's outstanding stock,
may be deemed to control Kana.
(d) During the past five years, neither Kana nor, to Kana's knowledge, any
person named in Schedule A to this statement, has been convicted in a criminal
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proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, neither Kana nor, to Kana's knowledge, any
person named in Schedule A to this statement, was a party to a civil proceeding
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of a judicial or administrative body of competent jurisdiction as a result of
which such person was or is subject to a judgment, decree or final order
enjoining future violations of or prohibiting or mandating activity subject to
Federal or State securities laws or finding any violation with respect to such
laws.
(f) Kana is a Delaware corporation. To Kana's knowledge, each natural
person listed on Schedule A is a citizen of the United States.
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Item 3. Source and Amount of Funds or Other Consideration.
Pursuant to an Agreement and Plan of Merger, dated April 9, 2001, by
and among Kana, Arrow Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Kana, and Broadbase, and subject to the conditions set forth
therein, Arrow Acquisition Corp. will be merged with and into Broadbase, with
each share of Broadbase's common stock being converted into the right to receive
1.05 shares of Kana's common stock. The merger is subject to the approval of
the merger agreement by the stockholders of Broadbase, the approval by Kana's
stockholders of the issuance of Kana's common stock in the merger and the
satisfaction or waiver of certain other conditions as more fully described in
the merger agreement. The foregoing summary of the merger is qualified in its
entirety by reference to the copy of the merger agreement included as Exhibit 1
to this Schedule 13D and incorporated herein in its entirety by reference.
CUSIP NO. 1113OR100 13D Page 5 of 11 Pages
This statement on Schedule 13D relates to voting agreements between
Kana and certain stockholders of Broadbase, including its directors, executive
officers and affiliates thereof, whereby the stockholders have agreed to vote
their shares of Broadbase's common stock in favor of the merger agreement. This
statement also relates to an option granted to Kana by Broadbase to purchase
shares of Broadbase's common stock upon the occurrence of certain events as
described in Item 4 below.
Item 4. Purpose of Transaction.
(a) - (b) As described in Item 3 above, this statement relates to the
merger of Arrow Acquisition Corp. with and into Broadbase in a statutory merger
pursuant to the Delaware General Corporation Law. At the effective time of the
merger, the separate existence of Arrow Acquisition Corp. will cease to exist
and Broadbase will continue as the surviving corporation and as a wholly-owned
subsidiary of Kana. Holders of outstanding shares of Broadbase's common stock
will receive, in exchange for each share of Broadbase's common stock held by
them immediately prior to the completion of the merger, 1.05 shares of Kana's
common stock. Kana will assume Broadbase's outstanding options and warrants.
The merger agreement contains customary representations and warranties
on the part of Kana, Broadbase and Arrow Acquisition Corp. The consummation of
the merger is subject to customary closing conditions, including, without
limitation, approval by the stockholders of the Broadbase and Kana. The merger
agreement also contains covenants regarding the activities of the parties
pending consummation of the merger. Generally, each of the parties must conduct
its business in the ordinary course consistent with past practice. In certain
circumstances, upon a termination of the merger agreement, a cash termination
fee is required to be paid. Concurrently and in connection with the merger
agreement, Kana also entered into a distribution and license agreement and a
revolving loan agreement with Broadbase, forms of which are attached as exhibits
to the merger agreement included as Exhibit 1 to this Schedule 13D.
As an inducement to Kana to enter into the merger agreement, certain
stockholders of Broadbase, including its directors, executive officers and
affiliates thereof, have entered into company voting agreements and irrevocable
proxies, dated April 9, 2001, with Kana and have, by executing the voting
agreements, irrevocably appointed the Board of Directors of Kana (or any one of
them) as his lawful attorney and proxy. These proxies grant Kana the limited
right to vote each of the 9,845,583 shares (which includes shares issuable upon
exercise of options exercisable within 60 days of April 9, 2001) and any shares
of Broadbase's common stock purchased or with respect to which beneficial
ownership is acquired prior to the termination of the voting agreement of
Broadbase's common stock beneficially and collectively owned by these
stockholders in all matters related to the merger. Subject to certain limited
exceptions, these stockholders are prohibited from transferring any of the
shares that they beneficially hold and from making any offer or agreement
relating thereto at any time prior to the expiration of the voting agreements.
These provisions were designed to facilitate approval of the merger agreement.
The stockholders subject to these voting agreements and the number of shares
beneficially owned by each of them is set forth in Schedule B hereto that is
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hereby incorporated herein by this reference. The foregoing summary of the
voting agreements is qualified in its entirety by reference to the copy of the
form of company voting agreement and irrevocable proxy included as Exhibit 2 to
this Schedule 13D and incorporated herein in its entirety by reference.
CUSIP NO. 1113OR100 13D Page 6 of 11 Pages
In exercising its right to vote the shares subject to the voting
agreements as lawful attorney and proxy of Broadbase's stockholders, Kana (or
any nominee of Kana) will be limited, at every Broadbase stockholders meeting
and in every written consent in lieu of such meeting to vote the shares in favor
of approval of the merger and the merger agreement and the other actions
contemplated by the merger agreement and against (i) any action or agreement
that would result in a breach of any representation, warranty, covenant or
obligation of Broadbase in the merger agreement or preclude fulfillment of a
condition precedent to the merger agreement, or (ii) any approval of a proposal
made in opposition to, or in competition with, the merger. Broadbase's
stockholders may vote these shares on all other matters. The voting agreements
terminate upon the earlier to occur of (i) such date and time as the merger
shall become effective and (ii) the date of termination of the merger agreement.
Concurrently with the voting agreements described herein, certain
directors and executive officers of Kana and their affiliates entered into
substantially identical voting agreements with Broadbase, a form of which is
attached as an exhibit to the merger agreement included as Exhibit 1 to this
Schedule 13D.
Also as an inducement to Kana to enter into the merger agreement, Kana
and Broadbase entered into a company stock option agreement, dated April 9,
2001. The company stock option agreement grants Kana an irrevocable option to
purchase, under certain conditions, up to the number of shares of Broadbase's
common stock equal to 19.9% of the shares of Broadbase's common stock issued and
outstanding at the time of exercise of the option, in the manner set forth in
the option agreement, at an exercise price of $0.7188 per share, subject to
adjustment in the event of changes in the Broadbase's capitalization. Kana may
exercise the option, in whole or in part, at any time and from time to time upon
the occurrence of an "Exercise Event" as set forth in Section 2 of the option
agreement. In addition, Broadbase has the right to repurchase shares of common
stock issued upon exercise of the option pursuant to Section 9 of the option.
The stock option agreement may not be exercised unless: (i) all
material consents, approvals, orders or authorizations of, or registrations,
declarations or filings with, any United States federal, state, or local
administrative agency or commission or other United States federal, state or
local governmental authority or instrumentality, if any, required in connection
with the issuance of the option shares pursuant to the stock option agreement
have been obtained or made, as the case may be, and (ii) no preliminary or
permanent injunction or other order by any court of competent jurisdiction in
the United States prohibiting or otherwise restraining such issuance is in
effect. The stock option agreement grants registration rights to Kana with
respect to the shares of Broadbase's common stock represented by the option.
The option will terminate upon the earliest of certain events, including
consummation of the merger, as set forth in the option agreement.
Concurrently with the option agreement described herein, Kana entered
into a substantially identical option agreement in favor of Broadbase, a form of
which is attached as an exhibit to the merger agreement included as Exhibit 1 to
this Schedule 13D.
The foregoing summary of the option is qualified in its entirety by
reference to the copy of the company stock option agreement included as Exhibit
3 to this Schedule 13D and incorporated herein by reference.
CUSIP NO. 1113OR100 13D Page 7 of 11 Pages
(c) Not applicable.
(d) Upon consummation of the merger, the initial directors of the surviving
corporation shall be the directors of Arrow Acquisition Corp. immediately prior
to the merger, until their respective successors are duly elected or appointed
and qualified. The initial officers of the surviving corporation shall be the
officers of Arrow Acquisition Corp. immediately prior to the merger, until their
respective successors are duly appointed.
(e) Other than as a result of the merger described in Item 3 above, not
applicable.
(f) Not applicable.
(g) Upon consummation of the merger, the certificate of incorporation of
Arrow Acquisition Corp., as in effect immediately prior to the merger, will be
the certificate of incorporation of the surviving corporation until thereafter
amended as provided by the Delaware General Corporation Law and such certificate
of incorporation. Upon consummation of the merger, the bylaws of Arrow
Acquisition Corp., as in effect immediately prior to the merger, will be the
bylaws of the surviving corporation until thereafter amended as provided by the
certificate of incorporation of the surviving corporation, the Delaware General
Corporation Law and such bylaws.
(h) - (i) If the merger is consummated, Broadbase's common stock will be
de-registered under the Securities Exchange Act of 1934, as amended, and de-
listed from the Nasdaq National Market.
(j) Other than described above, Kana currently has no plan or proposals
that relate to, or may result in, any of the matters listed in Items 4(a) - (i)
of Schedule 13D (although Kana reserves the right to develop such plans).
Item 5. Interest in Securities of the Issuer.
(a) - (b) If the option becomes exercisable, Kana will have the right to
acquire a number of shares equal to 19.9% of the issued and outstanding shares
of Broadbase's common stock at the time of the exercise of the option. Based
upon the number of shares of Broadbase's common stock outstanding on April 9,
2001, Kana would be entitled to purchase up to 16,330,708 shares of Broadbase's
common stock. If all of these shares were acquired, Kana would have sole voting
and dispositive power over these shares, and these shares would constitute
approximately 16.6% of Broadbase's outstanding common stock after giving effect
to the exercise of the option.
Because of the company stock voting agreements and irrevocable
proxies, Kana may be deemed to be the beneficial owner of at least 9,845,583
shares (which includes shares issuable upon exercise of options exercisable
within 60 days of April 9, 2001) of Broadbase's common stock. These shares
constitute approximately 11.7% of the issued and outstanding shares of
Broadbase common stock.
Kana has the power to vote the shares subject to the voting agreements
for the limited purposes described above in Item 4. Kana does not have the
power to dispose of, or to direct the disposition of, any shares of Broadbase's
common stock pursuant to the voting agreements. Kana (i) is not entitled to any
rights as a stockholder of Broadbase as to the shares
CUSIP NO. 1113OR100 13D Page 8 of 11 Pages
covered by the voting agreements and (ii) disclaims any beneficial ownership of
the shares of Broadbase common stock that are covered by the voting agreements.
To Kana's knowledge, no shares of Broadbase common stock are
beneficially owned by any of the persons named in Schedule A except for shares
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that may be beneficially owned by David M. Beirne. Mr. Beirne is an affiliate of
funds affiliated with Benchmark Capital. Funds affiliated with Benchmark Capital
hold 3,889,484 shares of Broadbase's common stock. This includes 3,440,743
shares of common stock held by Benchmark Capital Partners, L.P. and 448,741
shares of common stock held by Benchmark Founders' Fund, L.P. Mr. Beirne
disclaims beneficial ownership of shares held by Benchmark Capital except to the
extent of his pecuniary interest in Benchmark Capital.
(c) Neither Kana nor, to the knowledge of Kana, any person named in
Schedule A, has effected any transaction in Broadbase's common stock during the
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past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
Other than the merger agreement, the voting agreement and the stock
option agreement, to the knowledge of Kana, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of Broadbase, including but not limited to, transfer of voting of
any of the securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Materials to be Filed as Exhibits.
The following documents are filed as exhibits:
1. Agreement and Plan of Merger, dated April 9, 2001, by and among
Kana Communications, Inc., a Delaware corporation, Arrow
Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Kana Communications, Inc., and Broadbase Software,
Inc., a Delaware corporation.
2. Form of Voting Agreement and Irrevocable Proxy, dated April 9,
2001, by and between Kana Communications, Inc., a Delaware
corporation, and the stockholder of Broadbase Software, Inc., a
Delaware corporation, that is a signatory thereto.
3. Stock Option Agreement, dated April 9, 2001, by and between Kana
Communications, Inc., a Delaware corporation, and Broadbase
Software, Inc., a Delaware corporation.
CUSIP NO. 1113OR100 13D Page 9 of 11 Pages
SIGNATURE
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 18, 2001
KANA COMMUNICATIONS, INC.
By: /s/ James C. Wood
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James C. Wood
Chief Executive Officer
Schedule A
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DIRECTORS AND EXECUTIVE OFFICERS OF
KANA COMMUNICATIONS, INC.
Present Principal Occupation
Including Name of Employer (if
other than Kana
Name Communications, Inc.) Address of Employer
-------------------------- ------------------------------- -------------------------------
Executive Officers
James C. Wood Chief Executive Officer and 740 Bay Road, Redwood City, CA
Chairman of the Board of 94063
Directors
David B. Fowler President 740 Bay Road, Redwood City, CA
94063
Nigel K. Donovan Chief Operating Officer 740 Bay Road, Redwood City, CA
94063
Art M. Rodriguez Interim Chief Financial Officer 740 Bay Road, Redwood City, CA
94063
Toya A. Rico Chief Personnel Officer 740 Bay Road, Redwood City, CA
94063
Outside Directors
David M. Beirne Managing Member of Benchmark 2480 Sand Hill Road, Suite 200,
Capital Management Co., L.P. Menlo Park, CA 94025
Robert W. Frick Self-employed Investor 3374 McGraw Lane, Lafayette, CA
94549
Eric A. Hahn Founding Partner of Inventures 465 Melville, Palo Alto, CA 94301
Group
Charles A. Holloway, Ph.D. Professor, Stanford University 335 Littlefield Drive, Stanford
Graduate School of Business University, Stanford, CA 94305
Steven T. Jurvetson Managing Director of Draper 400 Seaport Court, Suite 250,
Fisher Jurvetson Redwood City, CA 94063
Schedule B
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BROADBASE STOCKHOLDERS SUBJECT TO
THE COMPANY VOTING AGREEMENTS AND IRREVOCABLE PROXIES
Stockholder Shares Beneficially Owned
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Kevin Harvey* 4,091,832
Robert Davoli** 2,540,136
Massood Zarrabian 526,434
Chuck Bay 804,277
Thomas Doyle 478,496
Christopher Maeda 427,486
Brian Kelly 479,479
Gregory Martin 123,736
David Milam 131,028
Eric Willgohs 120,179
Fabio Angelillis 87,500
Brian Moore 35,000
* Includes 3,440,743 shares of common stock held by Benchmark Capital Partners,
L.P., 448,741 shares held by Benchmark Founders' Fund, L.P., 162,348 shares held
by Mr. Harvey, and options to purchase 40,000 shares held by Mr. Harvey that are
fully exercisable. Mr. Harvey, a member of the board of directors of Broadbase,
is a Managing Member of Benchmark Capital Management Co., LLC, the general
partner of Benchmark Capital Partners, L.P. and Benchmark Founders' Fund, L.P.
** Includes 1,464,974 shares of common stock and a fully exercisable warrant to
purchase 10,025 shares of common stock held by Sigma Partners IV, L.P., 438,407
shares held by Sigma Partners V, L.P., 403,202 shares and a fully exercisable
warrant to purchase 2,618 shares of common stock held by Sigma Associates IV,
L.P., 101,850 shares held by Sigma Associates V, L.P., 48,056 shares and a fully
exercisable warrant to purchase 308 shares of common stock held by Sigma
Investors IV, L.P., 14,686 shares held by Sigma Investors V, L.P., 36,010 shares
held by Mr. Davoli and an option to purchase 20,000 shares held by Mr. Davoli
that is fully exercisable. Mr. Davoli is a Managing Director of Sigma Management
IV, L.L.C. and Sigma Management V, L.L.C., the general partner of Sigma Partners
IV, L.P., Sigma Associates IV, L.P., Sigma Investors IV, L.P., and Sigma
Partners V, L.P., Sigma Associates V, L.P., and Sigma Investors V, L.P.,
respectively, and accordingly may be deemed to beneficially own shares owned by
the funds. Investment decisions of the funds are made by a five-member committee
of which Mr. Davoli is a member.