**Exhibit 10.41**

BUSINESS FINANCING AGREEMENT 

dated as of December 29, 2005 

between 

BRIDGE BANK, NATIONAL ASSOCIATION

and 

KANA SOFTWARE, INC., aDelaware corporation (“Borrower”). 

A. Lender end Borrower have previously entered into that certain Business Financing Agreement dated as of November 30, 2005 (as may be amended fromtime to time, the “Original Credit Agreement”). 

B. The Original Credit Agreement provided for a Revolving Credit Line inthe aggregate amount of up to $7,000.000.00 (the “Original Loan”). 

C. Borrower and Lender desire to enter in to this certain Business Financing Agreement dated December 29, 2005 whereby Lender will make additionalAdvances to Borrower in an aggregate amount of up to $1,500,000.00 provided that the aggregate amount of Advances under this Agreement and Formula Advances and Nonformula Advances under the Original Credit Agreement must not exceed $7,500,000.00 atany one time. 

D. Capitalized terms used in this Agreement have the meaning set forth in the Original Credit Agreement. 

Borrower and Lender agree as follows: 

1.Definitions and Construction. 

1.1 Definitions. In this Agreement: 

“Account Balance” means at any time the aggregate of the Receivable Amounts of all Financed Receivables at such time. 

“Account Debtor” has the meaning in the California Uniform Commercial Code and includes any person liable on any Receivable, includingwithout limitation, any guarantor of any Receivable and any issuer of a letter of credit or banker’s acceptance assuring payment thereof. 

“Adjustments” means all discounts, allowances, disputes, offsets, defenses, rights of recoupment, rights of return, warranty claims, or short payments, asserted by or on behalf of any Account Debtor with respect to anyFinanced Receivable. 

“Advance” means as to any Receivable, the advance made by Lender to Borrower in respect of suchReceivable pursuant to Section 2.2. 

“Advance Rate” means 80% or such greater or lesser percentage as Lender may fromtime to time establish in its sole discretion upon notice to Borrower. 

“Agreement” means this Business FinancingAgreement. 

“Collateral” means all of Borrower’s rights and interest in any and all personalproperty, whether now existing or hereafter acquired or created and wherever located, and all products and proceeds thereof and accessions thereto, including the following (collectively, the “Collateral”): accounts, including health careinsurance receivables, chattel paper, inventory, equipment, instruments, including promissory notes, investment property, documents, deposit accounts, letter of credit rights, any commercial tort claim of Borrower which is now or hereafteridentified by Borrower or Lender, general intangibles, and supporting obligations. 

“Collections” means all payments fromor on behalf of an Account Debtor with respect to Receivables. 

“Compliance Certificate” means a certificate in the formattached to this Agreement by the chief financial officer of Borrower that, among other things, the representations and warranties set forth in this Agreement are true and correct as of the date such certificate is delivered. 

“Credit Limit” means $1,875,000.00. 

“Default” means any Event of Default or any event that with notice, lapse of time or otherwise would constitute an Event of Default. 

“Earned Reserve” means for any Financed Receivable which has been paid in full during a Reconciliation Period, the amount by which theamount(s) paid on such Financed Receivable exceeds the Advance made on such Financed Receivable. 

“Eligible Receivable”means a Receivable that satisfies all of the following: 

(a) The Receivable has been created by Borrower in the ordinarycourse of Borrower’s business and without any obligation on the part of Borrower to render any further performance. 

(b) There are no conditions which must be satisfied before Borrower is entitled to receive payment of the Receivable, and the Receivable does not arise from COD sales, consignments or guaranteed sales. 

(c) The Account Debtor upon the Receivable does not claim any defense to payment of the Receivable, whether well founded or otherwise.

(d) The Receivable is not the obligation of an Account Debtor who has asserted or may assert any counterclaims or offsetsagainst Borrower (including offsets for any “contra accounts” owed by Borrower to the Account Debtor for goods purchased by Borrower or for services performed for Borrower). 

(e) The Receivable represents a genuine obligation of the Account Debtor and to the extent any credit balances exist in favor of theAccount Debtor, such credit balances shall be deducted in calculating the Receivable Amount. 

 

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(f) Borrower has sent an invoice to the Account Debtor in the amount of the Receivable.

(g) Borrower is not prohibited by the laws of the state where the Account Debtor is located from bringing an action in thecourts of that state to enforce the Account Debtor’s obligation to pay the Receivable. Borrower has taken all appropriate actions to ensure access to the courts of the state where the Account Debtor is located, including, where necessary, thefiling of a Notice of Business Activities Report or other similar filing with the applicable state agency or the qualification by Borrower as a foreign corporation authorized to transact business in such state. 

(h) The Receivable is owned by Borrower free of any title defects or any liens or interests of others except the security interest infavor of Lender, and Lender has a perfected, first priority security interest in such Receivable. 

(i) The Account Debtor onthe Receivable is not any of the following: (i) an employee, affiliate, parent or subsidiary of Borrower, or an entity which has common officers or directors with Borrower; (ii) the U.S. government or any agency or department of the U.S.government unless Lender agrees in writing to accept the Receivable, Borrower complies with the procedures in the Federal Assignment of Claims Act of 1940 (41 U.S.C.§15) with respect to the Receivable, and the underlying contract expresslyprovides that neither the U.S. government nor any agency or department thereof shall have the right of set-off against Borrower; or (iii) any person or entity located in a foreign country unless (A) the Receivable is supported by anirrevocable letter of credit issued by a bank acceptable to Lender, and (B) if requested by Lender, the original of such letter of credit and/or any usance drafts drawn under such latter of credit and accepted by the issuing or confirming bankhave been delivered to Lender. 

(j) The Receivable is not in default (a Receivable will be considered in default if any ofthe following occur: (i) the Receivable is not paid within 90 days from its invoice date; (ii) the Account Debtor obligated upon the Receivable suspends business, makes a general assignment for the benefit of creditors, or fails to pay itsdebts generally as they come due; or (iii) any petition is filed by or against the Account Debtor obligated upon the Receivable under any bankruptcy law or any other law or laws for the relief of debtors): 

(k) The Receivable does not arise from the sale of goods which remain in Borrower’s possession or under Borrower’s control.

(l) The Receivable is not evidenced by a promissory note or chattel paper, nor is the Account Debtor obligated to Burrowerunder any other obligation which is evidenced by a promissory note. 

(m) The Receivable is otherwise acceptable to Lender.

“Event of Default” has the meaning set forth in Section 9.1. 

 

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“Facility Fee” means a payment of $5,000.00 due upon execution of this Agreement andannually thereafter. 

“Finance Charge” means for each Reconciliation Period an interest amount equal to the Finance ChargePercentage of the average daily Account Balance outstanding during such Reconciliation Period. 

“Finance ChargePercentage” means a rate per month equal to .75 percentage points. 

“Financed Receivable” means a Receivable forwhich Lender makes an Advance pursuant to a Funding Request. 

“Funding Request” means a writing signed by an authorizedrepresentative of Borrower which accurately identifies the Receivables which Lender, at its election, is being requested to finance, and includes for each such Receivable the correct amount owed by the Account Debtor, the name and address of theAccount Debtor, the invoice number, the invoice date and the account code. 

“Lender” means Bridge Bank, NationalAssociation, and its successors and assigns. 

“Obligations” means all liabilities and obligations of Borrower to Lender ofany kind or nature, present or future, arising under or in connection with this Agreement or under any other document, instrument or agreement, whether or not evidenced by any note, guarantee or other instrument, whether arising on account or byoverdraft, whether direct or indirect (including those acquired by assignment) absolute or contingent, primary or secondary, due or to become due, now owing or hereafter arising, and however acquired; including, without limitation, all Advances,Finance Charges, fees, interest, expenses, professional fees and attorneys’ fees. 

“Original Credit AgreementAdvances” means the Formula Advances and the Non-Formula Advances (as both are defined in the Original Credit Agreement”). 

“Overadvance” means (a) as to the total amount of the Advances, the amount that exceeds, if any, (i) the product of the Credit Limit and the Advance Rate, (b) as to any Advance (i) with respect to anyreceivable which is not an Eligible Receivable, the entire outstanding amount of such Advance, and (ii) in all other cases the amount, if any, by which the outstanding amount of such Advance exceeds the product of (i) the Advance Rate and(ii) the Receivable Amount of Financed Receivable in respect of which such Advance was made and (c) as to the total amount of Advances and Original Credit Agreement Advances, the amount which exceeds $7,500,000. 

“Processing Fee” means a fee equal to .75% of the Receivable Amount of each Financed Receivable. 

“Recovery Fee” means for any Collections which the Borrower has failed to remit as required by the Agreement a fee equal to $5,000.

 

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“Receivable Amount” means as to any Receivable, the Receivable Amount due from the Account Debtor after deducting all discounts, credits, offsets, payments or otherdeductions of any nature whatsoever, whether or not claimed by the Account Debtor. 

“Receivables” means Borrower’s rights to payment arising in the ordinary course of Borrower’s business, including accounts,chattel paper, instruments, contract rights, documents, general intangibles, letters of credit, drafts, and bankers acceptances. 

“Reconciliation Date” means the last calendar day of each Reconciliation Period.

“Reconciliation Period” means each calendar month. 

“Refundable Reserve” means for anyReconciliation Date: 

(a) The sum of (i) the total of the Earned Reserves as to all Financed Receivables as of suchReconciliation Date and (ii) the amount of Collections received by Lender during the Reconciliation Period with respect to Receivables other than Financed Receivables and not previously remitted to Borrower, 

minus

(b) The total for that Reconciliation Period ending on such Reconciliation Date of: 

(i) Processing Fee, FacilityFee, and Recovery Fees; 

(ii) Finance Charges; 

(iii) Adjustments; 

(iv) Any outstanding Overadvance Amounts; 

(v) all amounts due, including professional fees and expenses, as setforth in Section 11 for which oral or written demand has been made by Lender to Borrower during that Reconciliation Period to the extent Lender has agreed to accept payment thereof by deduction from the Refundable Reserve; and 

(vi) all amounts collected by Borrower on Financed Receivables during the Reconciliation Period and not remitted to Lender. 

“Reserve” means as to any Financed Receivable the amount by which the Receivable Amount of the Financed Receivable exceeds the Advanceon that Financed Receivable. 

“Reserve Percentage” means 100% less the Advance Rate. 

“Termination Fee” means a payment equal to 1% of the Credit Limit. 

 

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1.2 Construction: 

(a) In this Agreement: (a) references to the plural include the singular and to the singular include the plural; (b) referencesto any gender include any other gender; (c) the terms “include” and “including” are not limiting; (d) the term “or” has the inclusive meaning represented by the phrase “and/or,” (e) unlessotherwise specified, section and subsection references are to this Agreement, and (f) any reference to any statute, law, or regulation shall include all amendments thereto and revisions thereof. 

(b) Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved using any presumption against eitherBorrower or Lender, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by each party hereto and their respective counsel. In case of any ambiguity or uncertainty, this Agreement shall be construedand interpreted according to the ordinary meaning of the words used to accomplish fairly the purposes and intentions of all parties hereto. 

(c) Titles and section headings used in this Agreement are for convenience only and shall not be used in interpreting this Agreement. 

2. Financed Receivables. 

2.1 Funding Requests. Borrower may request that Lender financeReceivables by delivering to Lender a Funding Request for the Receivables for which a request for financing is made. Lender shall be entitled to rely on all the information provided by Borrower to Lender on or with the Funding Request and to rely onthe signature on any Funding Request as an authorized signature of Borrower. 

2.2 Acceptance of Receivables. Lender has noobligation to finance any Receivable and may exercise its sole discretion in determining whether tiny Receivable is an Eligible Receivable before financing such Receivable. Upon acceptance by Lender of any Receivable described in a Funding Request,Lender shall make an Advance to Borrower in an amount equal to the Advance Rate multiplied by the Receivable Amount of such Receivable. Upon Lender’s acceptance of the Receivable and payment to Borrower of the Advance, the Receivable shallbecome a “Financed Receivable,” it shall be a condition to each Advance that (a) all of the representations and warranties set forth in Section 6 are true and correct on the date of such Advance as though made at and as of eachsuch date and (b) no Default has occurred and is continuing, or would result from such Advance. In no event shall the Lender be obligated to make any Advance that results in an Overadvance or while any Overadvance is outstanding. 

2.3 Rights in Respect of Financed Receivables. Effective upon Lender’s payment of an Advance, Lender shall have the exclusive right toreceive all Collections on the Financed Receivable and no Adjustments will be made without the Lender’s consent, Lender shall have, with respect to any goods related to the Financed Receivable, all the rights and remedies of an unpaid sellerunder the California Uniform Commercial Code and other applicable law, including the rights of replevin, claim and delivery, reclamation and stoppage in transit. 

 

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2.4 Reserve. The Reserve is a book balance maintained on the records of Lender and shall not be asegregated fund and is not the property of Borrower. 

2.5 Due Diligence. Lender may at any time and from time to time contactAccount Debtors and other persons obligated or knowledgeable in respect of Receivables to confirm the Receivable Amount of such Receivables, to determine whether Receivables constitute Eligible Receivables, and for any other purpose in connectionwith this Agreement. Lender may audit Borrower’s Receivables and any and all record pertaining to the Collateral, at Lender’s sole discretion and at Borrowers expense. 

3. Collections, Charges and Remittances. 

3.1 Collections. Lender may request that Account Debtor’s pay (by wire transfer or otherwise) Collections to Lender directly. Lender shallcredit Collections with respect to Financed Receivables received by Lender to Borrower’s Account Balance within three business days of the date received. If no Default has occurred and is continuing, Lender agrees to credit the RefundableReserve with the amount of Collections it receives with respect to Receivables other than Financed Receivables; provided that upon the occurrence and during the continuance of any Default, Lender may apply all Collections to the Obligationsin such order and manner as Lender may determine. Lender has no duty to do any act other than to turn over such amounts as required above. If an item of Collections is not honored or Lender does not receive good funds for any reason, the amountshall be included in the Account Balance as if the Collections had not been received and Finance Charges under Section 3.2 shall accrue thereon. 

3.2 Finance Charges. On each Reconciliation Date Borrower shall pay to Lender the Finance Charge for the Reconciliation Period ending on such Reconciliation Date. Lender may deduct the accrued Finance Chargesas set forth in Section 3.5. 

3.3 Fees. 

(a) Processing Fee. At the time each Advance is made. Borrower shall pay to Lender the Processing Fee with respect to such Advanceis being made. 

(b) Termination Fee. In the event this Agreement is terminated prior to the first anniversary of thedate of this Agreement, Borrower shall pay the Termination Fee to Lender. 

(c) Facility Fee. Borrower shall pay theFacility Fee to Lender promptly upon the execution of this Agreement and annually thereafter or as otherwise agreed to by Lender. 

(d) Recovery Fee. If Borrower fails to remit any Collections to Lender as herein provided, Borrower shall in each case pay to Lender the Recovery Fee for the amount of such Collections. 

3.4 Reporting. Within 30 days after the end of each Reconciliation Period, Lender shall send to Borrower a report covering the transactions forthat Reconciliation Period, including the amount of all Financed Receivables, all Collections, Adjustments, Finance 

 

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Charges, and other fees and charges. The accounting shall be deemed correct and conclusive unless Borrower makes writtenobjection to Lender within 30 days after the Lender mails the accounting to Borrower. 

3.5 Reconciliations. Unless a Default hasoccurred and is continuing, Lender shall refund to Borrower after each Reconciliation Date, the Refundable Reserve, if positive, for such Reconciliation Date by payment by any means of payment acceptable to Borrower and Lender, subject toLender’s rights under Section 4.3 and Lender’s rights of offset and recoupment. If the Refundable Reserve is negative, Borrower shall immediately pay such amount in the same manner as set forth in Section 4.3 for Overadvances.

3.6 Adjustments. In the event of a breach of Sections 6 or 7, or in the event any Adjustment or dispute is asserted by any AccountDebtor, Borrower shall promptly advise Lender and shall, subject to the Lender’s approval, resolve suchdisputes and advise Lender of any adjustments. Unless the Advance for the disputed Financed Receivable is repaid in full, Lender shall have the right, at any time, to take possession of any rejected, returned, or recovered personal property. If suchpossession is not taken by Lender, Borrower is to resell it for Lender’s account at Borrower’s expanse with the proceeds made payable to Lender. While Borrower retains possession of any returned goods, Borrower shall segregate said goodsand mark them as property of Lender. 

4. Recourse and Overadvances. 

4.1 Recourse. Advances and the other Obligations shall be with full recourse against Borrower. If any Advance is not repaid in full within 90 days from the earlier of (a) invoice date, or (b) the dateon which such Advance is made, Borrower shall immediately pay the outstanding amount thereof to Lender. 

4.2 Overadvances. Upon anyoccurrence of an Overadvance, Borrower shall immediately pay down the Advances so that, after giving effect to such payments, no Overadvance exists. 

4.3 Borrower’s Payment. When any Overadvance or other amount owing to Lender becomes due, Lender shall inform Borrower of the manner of payment which may be any one or more of the following in Lenders solediscretion: (a) in cash immediately upon demand therefore; (b) by delivery of substitute invoices and a Funding Request acceptable to Lender which shall thereupon become Financed Receivables; (c) by deduction from or offset againstthe Refundable Reserve that would otherwise be due and payable to Borrower; (d) by deduction from or offset against the amount that otherwise would be forwarded to Borrower in respect of any further Advances that may be made by Lender; or(e) by any combination of the foregoing as Lender may from time to time choose. 

5. Power of Attorney. Borrower irrevocably appoints Lender andits successors and assigns as Borrowers true and lawful attorney in fact, and authorizes Lender, whether or not there has been an Event of Default, 

(i) to sell, assign, transfer, pledge, compromise, or discharge the whole or any part of the Receivables; 

 

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(ii) to demand, collect, receive, sue, and give releases to any Account Debtor for themonies due or which may became due upon or with respect to the Receivables and to compromise, prosecute, or defend any action, claim, case or proceeding relating to the Receivables, including the filing of a claim or the voting of such claims in anybankruptcy case, all in Lender’s name or Borrower’s name, as Lender may choose; 

(iii) to prepare, file and signBorrower’s name on any notice, claim, assignment, demand, draft, or notice of or satisfaction of lien ormechanics’ lien or similar document; and 

(iv) to notify all Account Debtors with respect to the Receivables to payLender directly; 

(v) to receive and open all mail addressed to Borrower for the purpose of collecting the Receivables;

(vi) to endorse Borrowers name on any checks or other forms of payment on the Receivables; 

(vii) to execute on behalf of Borrower any and all instruments, documents, financing statements and the like to perfect Lender’sinterests in the Receivables and Collateral; 

(viii) To debit any Borrowers deposit accounts maintained with Lender for anyand all Obligations due under this Agreement; and 

(ix) to do all acts and things necessary or expedient, in furtherance ofany such purposes 

Upon the occurrence and continuation of an Event of Default, all of the power of attorney rights granted by Borrower toLender hereunder shall be applicable with respect to all Receivables and all Collateral. 

6. Representations and Warranties. Borrower represents andwarrants: 

(a) With respect to each Financed Receivable: 

(i) It is the owner with legal right to sell, transfer and assign it; 

(ii) The correct Receivable Amount is on the Funding Request and is not disputed: 

(iii) Such Financed Receivable is an Eligible Receivable; 

(iv) Lender has the right to endorse and/or require Borrower to endorse all payments received on Financed Receivables and all proceeds ofCollateral; and 

 

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(v) No representation, warranty or other statement of Borrower in any certificate orwritten statement given to Lender contains any untrue statement of a material fact or omits to state a material fact necessary to make the statement contained in the certificates or statement not misleading. 

(b) Borrower is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, anystate in which the conduct of its business or its ownership of property requires that it be qualified, 

(c) The execution, delivery andperformance of this Agreement has been duly authorized, and does not conflict with Borrower’s organizational documents, nor constitute an Event of Default under any material agreement by which Borrower is bound. Borrower is not in default underany agreement to which or by which it is bound. 

(d) Borrower has good title to the Collateral and all inventory is in all materialrespects of good and marketable quality, free from material defects. 

(e) Borrower’s name, form of organization, chief executiveoffice, and the place where the records concerning all Financed Receivables end Collateral are kept is set forth at the beginning of this Agreement, Borrower is located at its address for notices set forth in this Agreement. 

(f) If Borrower owns, holds or has any interest in, any copyrights (whether registered, or unregistered), patents or trademarks, and licenses of any ofthe foregoing, such interest has been specifically disclosed and identified to Lender in writing. 

7. Miscellaneous Provisions. Borrower will:

(a) Maintain its corporate existence and good standing in its jurisdictions of incorporation and maintain its qualification in eachjurisdiction necessary to Borrower’s business or operations. 

(b) Give Lender at least 30 days prior written notice of changes to its name, organization, chief executive office or location of records. 

(c) Pay all its taxes including gross payroll, withholding and sales taxes when due and will deliver satisfactory evidence of payment to Lender ifrequested. 

(d) Provide to Lender a written report within 10 days, if payment of any Financed Receivable does not occur by its due date andinclude the reasons for the delay. 

(e) Give Lender copies of (i) all Forms 10-K, 10-Q and 8-K (or equivalents) within 5 days offiling with the Securities and Exchange Commission, while Any Financed Receivable is outstanding and (ii) annual financial statements, as soon as available, and in any event within 365 days following the end of Borrower’s fiscal year,certified by, and with an unqualified opinion of, an independent certified public accountant acceptable to Lender. 

 

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(f) Execute any further instruments and take further action as Lender requests to perfect or continueLender’s security interest in the Collateral or to affect the purposes of this Agreement. 

(g) Provide Lender with a ComplianceCertificate no later than 5 clays following each quarter end or as requested by Lender. 

(h) Immediately notify, transfer and deliver toLender all Collections Borrower receives. 

(i) Not create, incur, assume, or be liable for any indebtedness. 

(j) Immediately notify Lender if Borrower hereafter obtains any interest in any copyrights, patents, trademarks or licenses that are significant in valueor are material to the conduct of its business or the value of any Financed Receivable. 

(k) Provide to Lender no later than 30 days afterthe end of each month the following with respect to Borrower’s financial condition and results of operations for such month and the period then ending: balance sheet, income statement; statement of cashflows, accounts receivable and payableaging, deferred revenue report, and such other matters as Lender may request. 

(l) Maintain its primary depository and operating accountswith Lender and, in the case of any deposit accounts not maintained with lender, grant to Lender a first priority perfected security interest in and “control” (within the meaning of Section 9104 of theCalifornia Uniform Commercial Code) of such deposit account pursuant to documentation acceptable to Lender. 

8. Security Interest. To secure theprompt payment and performance to Lender of all of the Obligations, Borrower hereby grants to Lender a continuing security interest In the Collateral. Borrower is not authorized to sell, assign, transfer or otherwise convey any Collateral withoutLender’s prior written consent, except tar the sale of finished inventory in the Borrower’s usual course of business. Borrower agrees to sign any instruments and documents requested by Lender to evidence, perfect, or protect the interestsof Lender in the Collateral. Borrower agrees to deliver to Lender the originals of all instruments, chattel paper and documents evidencing or related to Financed Receivables and Collateral. Borrower shall not grant or permit any lien or securityinterest in the Collateral or any interest therein. 

9. Default and Remedies. 

9.1 Events of Default. The occurrence of any one or more of the following shall constitute an Event of Default hereunder. 

(a) Failure to Pay. Borrower fails to make a payment under this Agreement. 

(b) Lien Priority. Lender fails to have an enforceable first lien (except for any prior liens to which Lender has consented inwriting) on or security interest in the Collateral. 

 

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(c) False Information. Borrower (or any guarantor) has given Lender false ormisleading information or representations. 

(d) Death. Borrower or any guarantor dies or becomes legally incompetent,or if Borrower is a partnership, any general partner dies or becomes legally incompetent. 

(e) Bankruptcy. Borrower(or any guarantor) files a bankruptcy petition, a bankruptcy petition is filed against Borrower (or any guarantor) or Borrower (or any guarantor) makes a general assignment for the benefit of creditors. 

(f) Receivers. A receiver or similar official is appointed for a substantial portion of Borrower’s (or any guarantor’s)business, or the business is terminated. 

(g) Judgments. Any judgments or arbitration awards are entered againstBorrower (or any guarantor), or Borrower (or any guarantor) enters into any settlement agreements with respect to any litigation or arbitration. 

(h) Material Adverse Change. A material adverse change occurs, or is reasonably likely to occur, in Borrower’s (or any guarantor’s) business condition (financial or otherwise), operations, propertiesor prospects, or ability to repay the credit; or Lender determines that it is Insecure for any other reason. 

(i)cross-default. Any default occurs under any agreement in connection with any credit Borrower (or any guarantor) or any of Borrower’s related entities or affiliates has obtained from anyone else or which Borrower (or any guarantor) or anyof Borrowers related entities or affiliates has guaranteed. 

(j) Default under Related Documents. Any default occursunder any guaranty, subordination agreement, security agreement, deed of trust, mortgage, or other document required by or delivered in connection with this Agreement or any such document is no longer in effect. 

(k) Other Agreements. Borrower (or any guarantor) or any of Borrower’s related entities or affiliates fails to meet the conditions of, or fails to perform any obligation under any other agreement Borrower (or any guarantor)or any of Borrower’s related entitles or affiliates has with Lender or any affiliate of Lender including and without limitation them Original Credit Agreement. 

(l) Change of Control. The holders of the capital ownership of the Borrower as of the date hereof cease to own and control,directly and indirectly, at least 90% of the capital ownership of the Borrower. 

(m) Other Breach Under Agreement.Borrower fails to meat the conditions of, or fails to perform any obligation under, any term of this Agreement not specifically referred to above. 

9.2 Remedies. Upon the occurrence of an Event of Default, (1) without implying any obligation to do so, Lender may cease making Advances or extending any other financial 

 

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accommodations to Borrower, (2) all or a portion of the Obligations shall be, at the option of and upon demand byLender, or with respect to an Event of Default described in Section 9.1(e), automatically and without notice or demand, due and payable in full; and (3) Lender shall have and may exercise all the rights and remedies under this Agreementand under applicable law, including the rights and remedies of a secured party under the California Uniform Commercial Code, all the power of attorney rights described in Section 5 with respect to all Collateral, and the right to collect,dispose of, sell, lease, use, and realize upon all Financed Receivables and all Collateral in any commercial reasonable manner. 

10. Accrual ofInterest. If any amount owed by Borrower hereunder is not paid when due, including, without limitation, amounts due under Section 3.3, Overadvances, amounts due under Section 11, and any other Obligations, such amounts shall bearInterest at a per annum rate equal to the per annum rate of the Finance Charges until the earlier of (i) payment in good funds or (ii) entry of a final judgment thereof, at which time the principal amount of any money judgment remainingunsatisfied shall accrue Interest at the highest rate allowed by applicable law. All interest and Finance Charges hereunder calculated at an annual rate shall be based on a year of 350 days, which results in a higher effective rate of interest thanif a year of 365 or 366 days were used. 

11. Fees, Costs and Expenses: Indemnification. The Borrower will pay to Lender upon demand all fees, costsand expenses (including fees of attorneys and professionals and their costs and expenses) that Lender incurs or may from time to time impose in connection with any of the following: (a) preparing, negotiating, administering, and enforcing thisAgreement or any other agreement executed in connection herewith, including any amendments, waivers or consents in connection with any of the foregoing, (b) any litigation or dispute (whether instituted by Lender, Borrower or any other person)in any way relating to the Financed Receivables, the Collateral, this Agreement or any other agreement executed in connection herewith or therewith, (c) enforcing any rights against Borrower or any guarantor, or any Account Debtor,(d) protecting or enforcing its interest in the Financed Receivables or the Collateral, (e) collecting the Financed Receivables and the Obligations, or (f) the representation of Lender in connection with any bankruptcy case orinsolvency proceeding involving Borrower, any Financed Receivable, the Collateral, any Account Debtor, or any guarantor. Borrower shall indemnify and hold Lender harmless from and against any and all claims, actions, damages, costs, expenses, andliabilities of any nature whatsoever arising in connection with any of the foregoing. 

12. Integration, Severability, Waiver, and Choice of Law.This Agreement and any related security or other agreements required by this Agreement, collectively: (a) represent the sum of the understandings and agreements between Lender and Borrower concerning this credit; (b) replace any prior oralor written agreements between Lender and Borrower concerning this credit; and (c) are intended by Lender and Borrower as the final, complete and exclusive statement or the terms agreed to by them. In the event of any conflict between thisAgreement and any other agreements required by this Agreement, this Agreement will prevail. If any provision of this Agreement is deemed invalid by reason of law, this Agreement will be construed as not containing such provision and the remainder ofthe Agreement shall remain in full force and effect. In the event of any conflict between this Agreement and any ether agreements by and between Lender and Borrower, Lender shall determine in its sole discretion 

 

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which agreement will prevail. Lender retains all of its rights, even if it makes an Advance after a default. If Lenderwaives a default, it may enforce a later default. Any consent or waiver under, or amendment of, this Agreement must be in writing, and no such consent, waiver, or amendment shall imply any obligation by Lender to make any subsequent consent, waiver,or amendment. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA. 

13. Notices. Allnotices shall be given to Lender and Borrower at the addresses or faxes set forth on the signature page of this Agreement and shall be deemed to have been delivered and received: (a) if mailed, three (3) calendar days after deposited inthe United States mail, first class, postage pre-paid, (b) one (1) calendar day after deposit with an overnight mail or messenger service; or (c) on the same date of confirmed transmission if sent by hand delivery, telecopy, telefaxor telex. 

14. Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OFACTION ARISING IN CONNECTION WITH THE OBLIGATIONS OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY OBLIGATION, OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHERNOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANYPARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. EACH PARTY REPRESENTS AND WARRANTS THAT ITHAS REVIEWED THIS WAIVER, HAS DETERMINED FOR ITSELF THE NECESSITY TO REVIEW THE SAME WITH ITS LEGAL COUNSEL, AND KNOWINGLY AND VOLUNTARILY WAIVES ALL RIGHTS TO A JURY TRIAL. 

15. REFERENCE PROVISION. 

(a) The parties prefer that any dispute between them be resolved inlitigation subject to a Jury Trial Waiver as set forth in the Loan Documents (defined below), but the California Supreme Court has held that pre-dispute Jury Trial Waivers not authorized by statute are unenforceable. This Reference Provision will beapplicable until: (i) the California Supreme Court holds that a pre-dispute Jury Trial Waiver provision similar to that contained in the Loan Documents is valid or enforceable; or (ii) the California Legislature enacts a statute whichbecomes law, authorizing pre-dispute Jury Trial Waivers of the type in the Loan Documents and, as a result, such waivers become enforceable. In addition, this Reference Provision, if not already applicable as otherwise provided herein, will becomeapplicable, if a Court, contrary to a choice of law provision contained in the Loan Documents, holds that the laws of the State of California apply to the Loan Documents. 

(b) Other than (i) nonjudicial foreclosure of security interests in real or personal property, (ii) the appointment of a receiver or (iii) the exercise of other provisional remedies any 

 

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of which may be initiated pursuant to applicable law), any controversy, dispute or claim (each, a “Claim”)between the parties arising out of or relating to this Agreement or any ether document, instrument or agreement between Lender and the undersigned (collectively in this Section, the “Loan Documents”), will be resolved by a referenceproceeding in California in accordance with the provisions of Section 638 et seq. of the California Code of Civil Procedure (“CCP”), or their successor sections, which shall constitute the exclusive remedy for the resolution of anyClaim, including whether the Claim is subject to the reference proceeding. Except as otherwise provided in the Loan Documents, venue for the reference proceeding will be in the Superior Court or Federal District Court in the County or District wherethe real property, if any, is located or in a County or District where venue is otherwise appropriate under applicable law (the “Court”). 

(c) The referee shall be a retired Judge or Justice selected by mutual written agreement of the parties. If the parties do not agree, the referee shall be selected by the Presiding Judge of the Court (or his or her representative). Arequest for appointment of a referee may be heard on an ex parts or expedited basis, and the parties agree that irreparable harm would result if ex parts relief is not granted. The referee shall be appointed to sit with all the powers provided bylaw. Pending appointment or the referee, the Court as power to issue temporary or provisional remedies. 

(d) The parties agree that time isof the essence in conducting the reference proceedings. Accordingly, the referee shall be requested, subject to change in the time periods specified herein for good cause shown, to (a) set the matter for a status and trial-setting conferencewithin fifteen (15) days after the date of selection of the referee, (b) if practicable, try all issues of law or fact within ninety (90) days after the date of the conference and (c) report a statement of decision within twenty(20) days after the matter has been submitted for decision. 

(e) The referee will have power to expand or limit the amount andduration of discovery. The referee may set or extend discovery deadlines or cutoffs for good cause, including a party’s failure to provide requested discovery for any reason whatsoever. Unless otherwise ordered based upon good cause shown, noparty shall be entitled to “priority” in conducting discovery, depositions may be taken by either party upon seven (7) days written notice, and all other discovery shall be responded to within fifteen (15) days after service. Alldisputes relating to discovery which cannot be resolved by the parties shall be submitted to the referee whose decision shall be final and binding. 

(f) Except as expressly set forth in this Agreement, the referee shall determine the manner in which the reference proceeding is conducted including the time and place of hearings, the order of presentation of evidence, and all otherquestions that arise with respect to the course of the reference proceeding. All proceedings and hearings conducted before the referee, except for trial, shall be conducted without a court reporter, except that when any party so requests, a courtreporter will be used at any hearing conducted before the referee, and the referee will be provided a courtesy copy of the transcript. The party making such a request shall have the obligation to arrange for and pay the court reporter. Subject tothe referee’s power to award costs to the prevailing party, the parties will equally share the cost of the referee and the court reporter at trial. 

 

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(g) The referee shall be required to determine all issues in accordance with existing case law and thestatutory laws of the State of California. The rules of evidence applicable to proceedings at law in the State of California will be applicable to the reference proceeding. The referee shall be empowered to enter equitable as well as legal relief,provide all temporary or provisional remedies, enter equitable orders that will be binding on the parties and rule on any motion which would be authorized in a trial, including without limitation motions for summary judgment or summary adjudication.The referee shall issue a decision and pursuant to CCP §644 the referee’s decision shall be entered by the Court as a judgment or an order in the same manner as if the action had been tried by the Court. The final judgment or order or fromany appealable decision or order entered by the referee shall be fully appealable as provided by law. The parties reserve the right to findings of fact, conclusions of laws, a written statement of decision, and the right to move for a new trial or adifferent judgment, which new trial, if granted, is also to be a reference proceeding under this provision. 

(h) If the enablinglegislation which provides for appointment of a referee is repealed (and no successor statute is enacted), any dispute between the parties that would otherwise be determined by reference procedure will be resolved and determined by arbitration. Thearbitration will be conducted by a retired judge or Justice, in accordance with the California Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with respect to discovery Bet forth above shallapply to any such arbitration proceeding. 

(i) THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE PROVISIONWILL BE DECIDED BY A REFEREE AND NOT BY A JURY. AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION WILLAPPLY TO ANY DISPUTE BETWEEN THEM WHICH ARISES OUT OF OR IS RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS. 

16. Term and Termination. Borrower andLender each have the right to terminate the financing of Receivables under this Agreement at any time upon notice to the other; provided that no such termination shall affect Lender’s security interest in the Financed Receivables andother Collateral, and this Agreement shall continue to be effective, and the obligations of Borrower to indemnify Lender with respect to the expenses, damages, losses, costs and liabilities described in Section 11 shall survive until allapplicable statute of limitations periods with respect to actions that may be brought against Lender have run, and Lender’s rights and remedies hereunder shall survive any such termination, until all transactions entered into and Obligationsincurred hereunder or in connection herewith have been completed and satisfied in full. Upon any such termination, Borrower shall, upon demand by Lender, immediately repay all Advances then outstanding. 

17. Other Agreements. (i) Any security agreements, liens and/or security interests securing payment of any obligations of Borrower owing to Lender or itsaffiliates also secure the Obligations, and are valid and subsisting and are not adversely affected by execution of this Agreement. An Event of Default under this Agreement constitutes a default under other 

 

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outstanding agreements between Borrower and Lender or its affiliates; (ii) Lender reserves the right to issue pressreleases, advertisements, and other promotional materials describing any successful outcome of services provided on Borrower’s behalf, Borrower agrees that Lender shall hove the right to identify Borrower by name in those materials. 

IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement on the day and year above written. 

 
BORROWER:  LENDER:KANA SOFTWARE, INC.  BRIDGE BANK, NATIONAL ASSOCIATIONBy: 
/s/ John M. Thompson
  By: 
/s/ Lee Shodiss
Name: John Thompson  Name: 
Lee Shodiss
Title: CFO  Title: 
SVP
Address for Notices:  Address for Notices:181 Constitution Drive  2120 El Camino RealMenlo Park, CA 94026  Santa Clara, CA 85050Fax: (650) 614-8350  Fax: (408) 423-8510
 

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