SEPARATION AGREEMENT AND GENERAL RELEASE

This Agreement is entered into between KANA Software, Inc., Inc. (the
"Company"), and John Huyett ("Huyett") (collectively "the parties").

RECITALS

WHEREAS Huyett is employed by the Company as its CFO and EVP of Finance;

WHEREAS Huyett and the Company wish to terminate their employment relationship
on mutually agreeable terms pursuant to the terms and conditions of this
agreement;

WHEREAS, the Company, its Affiliates, and Huyett desire to resolve all claims as
described in this Agreement, and thereby avoid the expense and uncertainty of
litigation. "Affiliate" shall be defined as any person or entity that directly
or indirectly controls, is controlled by, or is under common control with KANA
Software, Inc.

ACCORDINGLY, the parties agree as follows:

    Resignation. Effective May 3, 2004 ("Resignation Date"), Huyett shall resign
    from his employment with the Company. Within three (3) business days of the
    Resignation Date, Company shall pay Huyett his final paycheck, which shall
    include all wages due and owing to Huyett through May 3, 2004 and any unused
    vacation time which Huyett has accrued during his employment with the
    Company.

 1. Company Obligations.

 a. Severance Sum. Following the Effective Date of this Agreement, the Company
    will pay Huyett the gross sum of Two Hundred and Five Thousand Dollars
    ($205,000), less applicable payroll withholdings (the "Severance Sum," which
    is equivalent to twelve (12) months' pay at Huyett's current annual salary).
    The Severance Sum shall be paid to Huyett in one lump sum within two (2)
    business days of the Effective Date of this Agreement (as defined in Section
    5 below).

 1. Huyett's Obligations.

    Return of Property. Huyett shall promptly return to the Company all property
    of the Company, including, without limitation, all equipment, tangible
    proprietary information, documents, books, records, reports, contracts,
    lists, computer disks (or computer-generated files or data), or copies
    thereof, created on any medium, prepared or obtained by Huyett in the course
    of or incident to his employment with the Company but no later than Friday
    May 7, 2004.

 a. Confidential Information. Huyett shall continue to be bound by the
    provisions of the Company's Invention, Assignment, Confidentiality and
    Arbitration Agreement, which Huyett signed as a condition of his employment.

Release. In exchange for the consideration described above, Huyett and his
representatives, heirs, successors, and assigns do hereby completely release and
forever discharge Company, any Affiliate, and their present and former
shareholders, officers, directors, agents, employees, attorneys, successors, and
assigns (collectively, "Released Parties") from all claims, rights, demands,
actions, obligations, liabilities, and causes of action of every kind and
character, known or unknown, mature or unmatured, which Huyett may have now or
in the future arising from any act or omission or condition occurring on or
prior to the Effective Date, whether based on tort, contract (express or
implied), or any federal, state, or local law, statute, or regulation, including
all claims for compensation, bonuses, shares of stock (including Huyett's right
to purchase, or actual purchase of, shares of stock of Company, including
without limitation, any claims of fraud, misrepresentation, breach of fiduciary
duty, breach of duty under applicable corporate law, and securities fraud under
any state or federal law and all claims arising from his employment with the
Company or the termination of his employment (collectively, the "Released
Claims"). By way of example and not in limitation of the foregoing, Released
Claims shall include any claims that may arise under Title VII of the Civil
Rights Act of 1964, the Age Discrimination in Employment Act of 1967, the
California Fair Employment and Housing Act, the Americans with Disabilities Act
of 1990, the Fair Labor Standards Act, the Employee Retirement Income Security
Act of 1974, the WARN Act and the California Labor Code, as well as any claims
asserting wrongful termination, termination in violation of public policy,
discrimination, breach of contract, breach of the covenant of good faith and
fair dealing, both express and implied, promissory estoppel, negligent or
intentional infliction of emotional distress, negligent or intentional
misrepresentation, negligent or intentional interference with contract or
prospective economic advantage, unfair business practices, libel, slander,
invasion of privacy, false imprisonment, battery, assault, conversion and
defamation. Huyett likewise releases the Released Parties from any and all
obligations for attorneys' fees incurred in regard to the above claims or
otherwise.

Release of Age Discrimination Claims. Huyett acknowledges that the release of
claims under the Age Discrimination in Employment Act ("ADEA") is subject to
special waiver protection. Therefore, Huyett specifically agrees that he
knowingly and voluntarily releases and waives any rights or claims of
discrimination under the ADEA. In particular, Huyett represents and acknowledges
that he understands the following: (a) he is not waiving rights or claims for
age discrimination under the ADEA that may arise after the date he signs this
Agreement; (b) he is waiving rights or claims for age discrimination under the
ADEA in exchange for the payments described herein, which are in addition to
anything of value to which he otherwise is entitled under the Company's
policies; (c) he has been given an opportunity to consider fully the terms of
this Agreement for twenty-one (21) days, although he is not required to wait
twenty-one (21) days before signing this Agreement; (d) he has been advised to
consult with an attorney of his choosing before signing this Agreement; (e) he
understands he has seven (7) days after he signs this Agreement in which to
revoke this Agreement, and the Agreement shall not become effective or
enforceable as to any party until the date upon which the revocation period
expires ("Effective Date").

Section 1542 Waiver. It is understood and agreed that this a full and final
release covering all known, unknown, anticipated, and unanticipated injuries,
debts, claims, or damages to Huyett which may have arisen or may be connected
with the employment of Huyett by the Company, or the termination thereof. Huyett
hereby waives any and all rights or claims which he may now have, or in the
future may have against the Released Parties under the terms of Section 1542 of
the California Civil Code, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Covenant Not to Sue. Huyett shall not sue or initiate against any Released Party
any compliance review, action, or proceeding, or participate in the same,
individually or as a member of a class, under any contract (express or implied),
or any federal, state, or local law, statute, or regulation pertaining in any
manner to the Released Claims. Huyett represents that he has no lawsuits, claims
or actions pending in his name, or on behalf of any other person or entity,
against Company or any other person or entity referred to herein.

Confidentiality. Huyett understands and agrees that this Agreement and each of
its terms, and the negotiations surrounding it, are confidential and shall not
be disclosed by Huyett to any entity or person, for any reason, at any time,
without the prior written consent of the Company, unless required by law.

Nondisparagement. Huyett agrees that he will not make or publish any statement
that would defame or disparage any of the Released Parties.

Nonadmission. The parties understand and agree that the furnishing of the
consideration for this Agreement shall not be deemed or construed at any time or
for any purpose as an admission of liability by the Company or by Huyett. The
liability for any and all claims is expressly denied by the Company and by
Huyett.

Integration. The parties agree that the terms of this Agreement are intended to
be the final expression of their agreement with respect to the subject matter of
this Agreement and may not be contradicted by evidence of any prior or
contemporaneous agreement, except to the extent that the provisions of any such
agreement have been expressly referred to in this Agreement as having continued
effect.

Amendments; Waivers. This Agreement may not be amended except by an instrument
in writing, signed by each of the parties. No failure to exercise and no delay
in exercising any right, remedy, or power under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, remedy,
or power under this Agreement preclude any other or further exercise thereof, or
the exercise of any other right, remedy, or power provided herein or by law or
in equity.

Assignment; Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective heirs,
successors, attorneys, and permitted assigns. This Agreement shall also inure to
the benefit of any Released Party. This Agreement shall not benefit any other
person or entity except as specifically enumerated in this Agreement.

Severability. If any provision of this Agreement, or its application to any
person, place, or circumstance, is held by an arbitrator or a court of competent
jurisdiction to be invalid, unenforceable, or void, such provision shall be
enforced to the greatest extent permitted by law, and the remainder of this
Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect.

Arbitration. All claims that the parties have against each other, in any way
related to the subject matter, interpretation, application, or alleged breach of
this Agreement ("Arbitrable Claims") shall be resolved by arbitration.
Arbitration shall be final and binding upon the parties and shall be the
exclusive remedy for all Arbitrable Claims. Arbitration of Arbitrable Claims
shall be in accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association, as amended. Either party may
bring an action in court to compel arbitration under this Agreement or to
enforce an arbitration award. Additionally, either party shall have the right to
seek provisional remedies or interim relief from a court of competent
jurisdiction for any claim or controversy arising out of related to violations
of paragraphs 3(b) of this Agreement. Otherwise, neither party shall initiate or
prosecute any lawsuit or administrative action in any way related to any
Arbitrable Claim. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY
JURY IN REGARD TO ARBITRABLE CLAIMS.

Attorneys' Fees. In any legal action, or other proceeding brought to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees and costs.

Governing Law. This Agreement shall be governed by and construed in accordance
with the law of the State of California.

Representation by Counsel. The parties acknowledge that (i) they have had the
opportunity to consult counsel in regard to this Agreement; (ii) they have read
and understand the Agreement and they are fully aware of its legal effect; and
(iii) they are entering into this Agreement freely and voluntarily, and based on
each party's own judgment and not on any representations or promises made by the
other party, other than those contained in this Agreement.

 

 Date: May 3, 2004          

   /John Huyett/                
John Huyett

 

 

 Date: May 3, 2004          

   /Chuck Bay/                  
Chuck Bay
CEO, KANA Software, Inc.