Exhibit 10.03

May 21, 2009

VIA HAND DELIVERY

Mr. Michael Shannahan

 

  Re: Terms of Separation

Dear Mike:

This letter confirms the agreement between you and KANA Software, Inc (“the
Company”) concerning the terms of your separation and offers you the separation
compensation we discussed in exchange for a general release of claims and
covenant not to sue.

1. Separation Date: May 18, 2009 is your last day of employment with the Company
(the “Separation Date”).

2. Acknowledgment of Payment of Wages: By your signature below, you acknowledge
that on the Separation Date, we provided you a final paycheck for all wages,
salary, bonuses, commissions, reimbursable expenses, accrued vacation and any
similar payments due you from the Company as of the Separation Date. By signing
below, you acknowledge that the Company does not owe you any other amounts. You
specifically acknowledge that you are not owed, and will not receive, an
incentive bonus for 2008.

3. Separation Compensation: In exchange for your agreement to the general
release and waiver of claims and covenant not to sue set forth in paragraphs 6
and 7 below and your other promises herein, the Company agrees to provide you
with the following:

a. Severance: The Company agrees to pay you, following the Effective Date (as
defined in paragraph 17 below) of this agreement, a total of $137,500, less
applicable state and federal payroll deductions, which constitutes six months of
your annual base salary. The Company will pay the severance to you on or before
June 1, 2009. In addition, subject at all times to your compliance with the
terms of this Agreement, including without limitation the provisions of
Section 7 below, the Company agrees to pay to you $27,552.00, less applicable
state and federal payroll deductions. This payment will be payable in six equal
installments with the first payment (1/6) on June 1, 2009, the second payment
(1/6) on June 15, 2009, the third payment (1/6) on July 15, 2009, the fourth
payment (1/6) on August 15, 2009, the fifth payment (1/6) on August 15, 2009,
and the last payment (1/6) on September 15, 2009.

b. COBRA: Upon your timely election to continue your existing health benefits
under COBRA, and consistent with the terms of COBRA and the Company’s health
insurance plan, the Company will pay the insurance premiums to continue your
existing health benefits for six months

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Mike Shannahan

May 21, 2009

Page 2

 

following the Separation Date. You will remain responsible for, and must
continue to pay, the portion of premiums, co-payments, etc. that you would have
paid had your employment continued. You are also responsible to make the timely
election to continue your existing health benefits under COBRA. Information
concerning COBRA continuation coverage will be provided to you from IGOE COBRA
administrators. You have 60 days from the Separation Date to notify IGOE in
writing of your election to continue your coverage.

c. Laptop Computer: You may keep possession of the Company provided laptop
computer valued at approximately $687.00 under the condition that the software
on the laptop, which is licensed to the Company, will be removed. Therefore, the
Company shall arrange to coordinate with You a time when you and the Company can
remove the software licenses belonging to the Company as soon as feasible
immediately following execution of this Agreement.

By signing below, you acknowledge that you are receiving the separation
compensation outlined in this paragraph in consideration for waiving your rights
to claims referred to in this agreement and that you would not otherwise be
entitled to the separation compensation.

4. Return of Company Property: You hereby warrant to the Company that you have
returned to the Company all property or data of the Company of any type
whatsoever that has been in your possession or control.

5. Confidential Information: You hereby acknowledge that you are bound by the
attached Employee Invention Assignment, Confidentiality and Arbitration
Agreement (Exhibit A), and that as a result of your employment with the Company
you have had access to the Company’s Proprietary Information (as defined in
Exhibit A), that you will hold all Proprietary Information in strictest
confidence and that you will not make use of such Proprietary Information on
behalf of anyone. You further confirm that you have delivered to the Company all
documents and data of any nature containing or pertaining to such Proprietary
Information and that you have not taken with you any such documents or data or
any reproduction thereof.

6. Mutual General Release and Waiver of Claims:

a. The payments and promises set forth in this agreement are in full
satisfaction of all accrued salary, vacation pay, bonus and commission pay,
profit-sharing, stock options, termination benefits or other compensation to
which you may be entitled by virtue of your employment with the Company or your
separation from the Company. To the fullest extent permitted by law, you hereby
release and waive any other claims you may have against the Company and its
owners, agents, officers, shareholders, employees, directors, attorneys,
subscribers, subsidiaries, affiliates, successors and assigns (collectively
“Releases”), whether known or not known, including, without limitation, claims
under any employment laws, including, but not limited to, claims of unlawful
discharge, breach of contract, breach of the covenant of good faith and fair
dealing, fraud, violation of public policy, defamation, physical injury,
emotional distress, claims for additional compensation or benefits arising out
of your employment or your separation of employment, claims under Title VII of
the 1964 Civil Rights Act, as amended, the California Fair Employment and
Housing Act and any other laws and/or regulations relating to employment or
employment discrimination, including, without limitation, claims based on

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Mike Shannahan

May 21, 2009

Page 3

 

age or under the Age Discrimination in Employment Act or Older Workers Benefit
Protection Act, and/or claims based on disability or under the Americans with
Disabilities Act. To the fullest extent permitted by law, the Company hereby
releases and waives any claims it may have against you and your agents,
successors and assigns arising out of, related to or connected with your
employment with the Company.

b. By signing below, you and the Company expressly waive any benefits of
Section 1542 of the Civil Code of the State of California, which provides as
follows:

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

c. You and the Company do not intend for you to release claims that you may not
release as a matter of law, including but not limited to claims for indemnity
under California Labor Code section 2802. To the fullest extent permitted by
law, any dispute regarding the scope of this general release shall be determined
by an arbitrator under the procedures set forth in the arbitration clause below.

7. Mutual Covenant Not to Sue:

a. To the fullest extent permitted by law, at no time subsequent to the
execution of this agreement will you or the Company pursue, or cause or
knowingly permit the prosecution, in any state, federal or foreign court, or
before any local, state, federal or foreign administrative agency, or any other
tribunal, any charge, claim or action of any kind, nature and character
whatsoever, known or unknown, which you may now have, have ever had, or may in
the future have against Releases, or which the Company may now have, have ever
had, or may in the future have against you, which is based in whole or in part
on any matter covered by this agreement.

b. Nothing in this section shall prohibit you from filing a charge or complaint
with a government agency such as but not limited to the Equal Employment
Opportunity Commission, the National Labor Relations Board, the Department of
Labor, the California Department of Fair Employment and Housing, or other
applicable state agency. However, you understand and agree that, by entering
into this agreement, you are releasing any and all individual claims for relief,
and that any and all subsequent disputes between you and the Company shall be
resolved through arbitration as provided below.

c. Nothing in this section shall prohibit or impair you or the Company from
complying with all applicable laws, nor shall this agreement be construed to
obligate either party to commit (or aid or abet in the commission of) any
unlawful act.

8. Mutual Nondisparagement: You agree that you will not disparage Releases or
their products, services, agents, representatives, directors, officers,
shareholders, attorneys, employees, vendors, affiliates, successors or assigns,
or any person acting by, through, under or in concert with any

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Mike Shannahan

May 21, 2009

Page 4

 

of them, with any written or oral statement. The Company agrees that its
officers and directors will not disparage you with any written or oral
statement. Nothing in this paragraph shall prohibit either party from providing
truthful information in response to a subpoena or other legal process.

9. Arbitration: Except for any claim for injunctive relief arising out of a
breach of a party’s obligations to protect the other’s proprietary information,
the parties agree to arbitrate, in San Mateo County, California through JAMS,
any and all disputes or claims arising out of or related to the validity,
enforceability, interpretation, performance or breach of this agreement, whether
sounding in tort, contract, statutory violation or otherwise, or involving the
construction or application or any of the terms, provisions, or conditions of
this agreement. Any arbitration may be initiated by a written demand to the
other party. The arbitrator’s decision shall be final, binding, and conclusive.
The parties further agree that this agreement is intended to be strictly
construed to provide for arbitration as the sole and exclusive means for
resolution of all disputes hereunder to the fullest extent permitted by law. The
parties expressly waive any entitlement to have such controversies decided by a
court or a jury.

10. Attorneys’ Fees: If any action is brought to enforce the terms of this
agreement, the prevailing party will be entitled to recover its reasonable
attorneys’ fees, costs and expenses from the other party, in addition to any
other relief to which the prevailing party may be entitled.

11. Confidentiality: The contents, terms and conditions of this agreement must
be kept confidential by you and may not be disclosed except to your immediate
family, accountant or attorneys or pursuant to subpoena or court order. You
agree that if you are asked for information concerning this settlement, you will
state only that you and the Company reached an amicable resolution of any
disputes concerning your separation from the Company. Any breach of this
confidentiality provision shall be deemed a material breach of this agreement.

12. No Admission of Liability: This agreement is not and shall not be construed
or contended by either you or Releases to be an admission or evidence of any
wrongdoing or liability on the part of you or Releases, and your and their
representatives, heirs, executors, attorneys, agents, partners, officers,
shareholders, directors, employees, subsidiaries, affiliates, divisions,
successors or assigns. This agreement shall be afforded the maximum protection
allowable under California Evidence Code Section 1152 and/or any other state or
federal provisions of similar effect.

13. Entire Agreement: This agreement constitutes the entire agreement between
you and Releases with respect to the subject matter hereof and supersedes all
prior negotiations and agreements, whether written or oral, relating to such
subject matter other than the confidentiality agreement referred to in paragraph
5, above. You acknowledge that neither Releases nor their agents or attorneys
have made any promise, representation or warranty whatsoever, either express or
implied, written or oral, which is not contained in this agreement for the
purpose of inducing you to execute the agreement, and you acknowledge that you
have executed this agreement in reliance only upon such promises,
representations and warranties as are contained herein.

14. Severability: The provisions of this agreement are severable, and if any
part of it is found to be invalid or unenforceable, the other parts shall remain
fully valid and enforceable. Specifically, should a court, arbitrator, or
government agency conclude that a particular claim may not be released as a
matter of law, it is the intention of the parties that the general release, the
waiver of unknown claims and the covenant not to sue above shall otherwise
remain effective to release any and all other claims.

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Mike Shannahan

May 21, 2009

Page 5

 

15. Modification; Counterparts; Facsimile Signatures: It is expressly agreed
that this agreement may not be altered, amended, modified, or otherwise changed
in any respect except by another written agreement that specifically refers to
this agreement, executed by authorized representatives of each of the parties to
this agreement. This agreement may be executed in any number of counterparts,
each of which shall constitute an original and all of which together shall
constitute one and the same instrument. Execution of a facsimile copy shall have
the same force and effect as execution of an original.

16. Review of Separation Agreement: You understand that you may take up to
twenty-one (21) days to consider this agreement and, by signing below, affirm
that you were advised to consult with an attorney prior to signing this
agreement. You also understand you may revoke this agreement within seven
(7) days of signing this document and that the compensation to be paid to you
pursuant to Paragraph 3 will be paid only at the end of that seven (7) day
revocation period.

17. Effective Date: This agreement is effective on the eighth (8th) day after
you sign it and without revocation by you.

18. Governing Law: This agreement shall be governed by and construed in
accordance with the laws of the State of California.

If you agree to abide by the terms outlined in this letter, please sign this
letter below and also sign the attached copy and return it to me. I wish you the
best in your future endeavors.

 

Sincerely, KANA Software, Inc. By:  

/s/    William A. Bose

  William A. Bose   Vice President & General Counsel

 

READ, UNDERSTOOD AND AGREED      

/s/    Michael J. Shannahan

    Date:  

5/22/09

Mike Shannahan