THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Kenexa Corporation (KNXA)

4/13/2006 Proxy Information

Other than compensation agreements and other arrangements which are described in the "Board of Directors" and "Executive Compensation" section of this proxy statement and the transactions described below, during our last fiscal year, there has not been, and there is not currently proposed, any transaction or series of similar transactions to which we were or will be a party in which the amount involved exceeded or will exceed $60,000 and in which any of our directors, nominees for director, executive officers, holders of more than five percent of any class of our voting securities or any member of the immediate family of the foregoing persons had or will have a direct or indirect material interest.

We believe that all of the transactions set forth below are on terms no less favorable to us than we could have obtained from unaffiliated third parties. It is our intention to ensure that all future transactions between us and our directors, officers, principal shareholders and their affiliates are approved by a majority of our board of directors, including a majority of the independent and disinterested members of our board of directors, and are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.

Investor Agreement

In April 2005, we entered into an agreement with all of the holders of our class B common stock, class C common stock, series A preferred stock and series B preferred stock. Under the terms of the agreement and in accordance with the terms of our third amended and restated articles of incorporation, upon the completion of our initial public offering in June 2005, we:

redeemed all of the outstanding shares of our series A preferred stock for a combination of approximately $28.6 million in cash and 1,134,126 shares of our common stock;

redeemed all of the outstanding shares of our series B preferred stock for a combination of approximately $11.4 million in cash and 724,250 shares of our common stock;

issued 2,179,152 shares of our common stock upon the conversion of all of the outstanding shares of our class B common stock; and

issued 2,100,060 shares of our common stock upon the conversion of all of the outstanding shares of our class C common stock.

In addition, under the terms of the agreement, upon the completion of our initial public offering (1) the holders of our outstanding warrants exercised all of their class A purchase warrants with an exercise price of $0.01 per share for a total of 396,195 shares of our common stock, and (2) our remaining outstanding warrants were amended to provide that certain provisions regarding adjustments to the shares available upon the exercise of, and exercise prices under, those warrants terminated.

The investor agreement also provides for nonvoting board observation rights to an individual designated by Parthenon Investors, L.P. until such time as Parthenon Investors, L.P. beneficially owns less than 5% of our outstanding common stock on a fully diluted basis.

Registration Rights Agreement

Pursuant to the terms of a second amended and restated registration rights agreement, Parthenon Investors, L.P., PCIP Investors, Wafra Acquisition Fund 14, L.P., Westbury Equity Partners SBIC, L.P., JMH Partners Corp., Shad Run Investments, L.P., The Shattan Group, LLC, Thomas S. Shattan, Gregory E. Mendel, G. Kevin Fechtmeyer, Alan Langer, Southfield Communications LLC, C. Meade Sutterfield, Peter Sulick, Margaret Sulick, David W. Beale, Cecily Shattan, Ward Shattan, Erica Mendel, David Mendel, James Mattutat and Andrew Arno are entitled to certain rights with respect to the registration of those shares under the Securities Act.

Loans to Executive Officers

The Sarbanes-Oxley Act of 2002 prohibits all loans to executive officers and directors of a public company and also prohibits any material modifications of loans to such individuals outstanding at the time of enactment on July 30, 2002. Every loan described below was granted by us prior to the enactment of the Sarbanes-Oxley Act of 2002, and in accordance with such legislation, we will not provide any new loans to directors or executive officers. Each of the obligations listed below was repaid prior to the completion of our initial public offering.

On January 15, 1998, Mr. Karsan, our Chief Executive Officer, executed a promissory note in the amount of $29,951 in favor of us as partial consideration for the purchase of shares of our common stock pursuant to the exercise of options. The promissory note had a stated term of three years, provided for repayment in three equal annual installments on each anniversary of the promissory note and carried no interest. In 2000, the payment obligations under this promissory note had been indefinitely suspended. This obligation was repaid prior to the completion of our initial public offering.

On January 15, 1999, each of Mr. Karsan, our Chief Executive Officer, Mr. Clark, our Chief Operating Officer, Mr. Erickson, our Vice Chairman, Mr. Kanter, our President, Human Capital Management, and Mr. Volk, our Chief Financial Officer, executed promissory notes in favor of us as partial consideration for the purchase of shares of our common stock pursuant to the exercise of options. The promissory notes had stated terms of three years, provided for repayment in three equal annual installments on each anniversary of the promissory notes and carried no interest. In 2001, the payment obligations under these promissory notes were indefinitely suspended. Set forth in the table below are the original principal balances of these promissory notes, all of which were repaid prior to the completion of our initial public offering. (See page 31 of proxy for table).

On January 15, 2000, each of Mr. Karsan, our Chief Executive Officer, Mr. Clark, our Chief Operating Officer, Mr. Erickson, our Vice Chairman, Mr. Kanter, our President, Human Capital Management, and Mr. Volk, our Chief Financial Officer, executed promissory notes in favor of us as full consideration for the purchase of shares of our common stock pursuant to the exercise of options. The promissory notes were full recourse, had a stated term of four years, provided for repayment in four equal annual installments on each anniversary of the promissory notes, carried no interest and were secured, pursuant to security agreements, by all of our capital stock held or thereafter acquired by these executive officers. In 2001, the payment obligations under these promissory notes were indefinitely suspended. Set forth in the table below are the original principal balances of these promissory notes, all of which were repaid prior to the completion of our initial public offering. (See page 31 of proxy for table).

In January 2004, we provided an interest-free loan in the amount of $100,000 to Ramarao V. Velpuri, our Chief Technology Officer, in connection with relocation expenses. This loan was repaid prior to the completion of our initial public offering.

Management Agreement

We were party to a management agreement with Parthenon Capital, Inc., an affiliate of Parthenon Investors, L.P., which terminated on December 16, 2004. Parthenon Investors, L.P. beneficially owns approximately 2,631,021 shares of our outstanding common stock. Under the management agreement, which initially became effective on December 16, 1999, Parthenon Capital, Inc. provided advisory services to us, including management support, board participation, involvement in pursuing acquisition opportunities and assistance in obtaining financing. The management agreement provided for an annual management fee of $75,000 payable to Parthenon Capital, Inc. for its advisory services. Our obligation to pay this annual fee terminated in December 2004. John C. Rutherford, one of our directors, is a principal member of Parthenon Investment Partners, LLC, which is the management member of Parthenon Investment Advisors, LLC, which is the general partner of Parthenon Investors, L.P. Mr. Rutherford, as a partner of an affiliate, is not eligible to receive compensation for his service on our board of directors. On February 15, 2006, Mr. Rutherford informed us of his intention to step down from our board of directors at the next annual meeting of shareholders.

Legal Services

One of our directors, Barry M. Abelson, is a partner in the law firm of Pepper Hamilton LLP. This firm has represented us since 1997. Payments by us to Pepper Hamilton LLP were less than 1% of that firm's revenues in each of the last three fiscal years. We believe that the services performed by Pepper Hamilton LLP were provided on terms no more or less favorable than those with unrelated parties.