Exhibit 10.37

[Kana Software, Inc. Letterhead]

February 28, 2008

Mr. Michael Shannahan

Dear Mike,

I am pleased to offer you the position of Executive Vice President and Chief
Financial Officer of KANA Software, Inc. (the “Company”), reporting directly to
Michael S. Fields, Chief Executive Officer or his designee.

This letter outlines the proposed terms of employment with KANA. Your expected
start date is expected to be Friday, February 29, 2008.

Your annual base salary will be $275,000 paid semi-monthly in accordance with
standard company practice. On your first payroll with KANA, you will receive a
one time, non refundable sign-on bonus of $11,458.33.

You will also be eligible for an annual incentive bonus of an additional
$137,500.00, prorated on length of service in 2008 and based on achievement of
your objectives and KANA’s financial performance. Details of this incentive
plan, including objectives and performance targets, will be confirmed in an
incentive bonus plan that will be proposed by the Company and is subject to the
approval of the Compensation Committee of the Board of Directors.

I will recommend that you be granted an option to purchase 350,000 shares of
stock. This grant recommendation is subject to approval by the Board of
Directors after your employment begins. The option would vest over four years
subject to a six-month cliff and would be governed by the terms set forth in the
Company’s standard form of stock option plan and agreement.

You will be eligible for separation benefits in one of the following two
situations. First, in the event of a Change in Control Event (as defined below),
then (a) 100% of the unvested shares under the stock option described above at
the time of such Change in Control Event shall immediately vest, subject to the
terms of the Company’s stock option agreement, and (b) in such event, you will
also receive a lump-sum separation payment of six (6) months annual base salary.
Second, in the event your employment is terminated without Cause, you will
receive a lump sum separation payment of six (6) months annual base salary.

A “Change in Control Event” shall mean a change in control of 50% or more of the
outstanding stock of the Company, and following such change you are not offered
the same or a similar position with the combined entity as held prior to the
change of control, or you are terminated without Cause within six months
following such change. The separation benefits identified herein shall not apply
should your employment be terminated for Cause. “Cause” for your termination
will exist at any time after the happening of one or more of the following
events:

(i) your gross negligence or willful misconduct in the performance of, or his
failure or refusal to perform, his duties with the Company, as determined by the
Company’s Board of Directors in good faith;

(ii) unprofessional, unethical or fraudulent conduct or conduct by you that
discredits the Company or is detrimental to the reputation, character or
standing of the Company;

(iii) dishonest conduct or a deliberate attempt to injure the Company;

(iv) your breach of your Invention Assignment and Confidentiality Agreement,
and/or your duty of confidentiality to Company, including, without limitation,
your theft, misappropriation and/or misuse of the Company’s proprietary
information;

(v) a failure or a refusal by you to comply in any material respect with the
reasonable policies, standards or regulations of the Company;

(vi) any unlawful or criminal act which would reflect badly on the Company in
the Company’s reasonable judgment;

(vii) your absence from work without an approved leave; or

(viii) your death.

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The Company will provide to you the health, holiday and other benefits available
to all its full time employees. Please find enclosed, for your review, is
information related to some of these benefits.

To indicate your acceptance of this offer of employment, please sign below and
return to me or Will Bose, Vice President and General Counsel at his
confidential fax 650-614-8301. Your acceptance of this offer will also
constitute your resignation from the Company’s Board of Directors and the audit
committee of the Board of Directors, effective immediately upon your return to
me or Will of a signed copy of this letter,

Your employment at KANA is subject to your signing the standard KANA Employee
Invention Assignment, Confidentiality and Arbitration Agreement. Your employment
will not be governed by a written or oral contract. You will be an “at-will”
employee, which means that either you or the Company may terminate your
employment at any time, for any or no reason, and with or without notice. This
at-will nature of your employment cannot be modified except in writing signed by
an executive officer of KANA.

Mike,all of us welcome you in joining KANA and we look forward to having you on
our team. Meanwhile, if you have any questions, please do not hesitate to call
me at (650) 614-8300.

 

Sincerely, /s/ Michael S. Fields Michael S. Fields Chief Executive Officer

Accepted:

Signature:   /s/ Michael Shannahan Name:   Michael Shannahan Date:   February
28, 2008