Document:

March __, 2001

Stylecraft Lamps, Inc.
Petals, Inc.
c/o Interiors, Inc.
320 Washington Street
Mount Vernon, NY 10553
Attn: Max Munn

Dear Max:

            Reference is made to the $5,000,000 Senior Subordinated Secured Note
Due 2002, dated as of March __, 2001, issued by Stylecraft Lamps, Inc., a
Tennessee corporation ("Stylecraft"), and Petals, Inc., a Delaware corporation
("Petals," and, with Stylecraft, the "Companies"), to the order of Interiors
Investors, L.L.C., a Delaware limited liability company ("Investors"), (such
note, as amended, restated, supplemented or otherwise modified from time to
time, the "Note"). Capitalized terms not otherwise defined herein shall have the
meanings given to such terms in the Note.

            This letter (this "Letter Agreement") serves to confirm our mutual
understanding that, notwithstanding anything contained in the Note or any of the
other Loan Documents to the contrary, in addition to any principal or interest
payable in respect of the Note, in the event that Interiors, Inc., a Delaware
corporation and owner of 100% of the capital stock of the Companies
("Interiors"), consummates any Special Sale (as hereinafter defined) at any time
prior to the later of (i) the third anniversary of the date hereof or (ii) the
payment in full of all of the principal and interest owing to Investors under
the Note, then the Companies shall be required to pay to Investors, in cash, an
amount equal to (x) $2,200,000 plus (y) $125,000 for each full calendar month
(plus a ratable amount thereof for each portion of a calendar month) elapsed
during the period commencing on October 1, 2001 and ending on the transaction
closing date of the first such Special Sale (such amount, the "Special Sale
Payment"). Following the occurrence of one or more Special Sales, the
consideration derived from such Special Sale(s) shall be determined in
accordance with the definition of Sale Consideration provided herein and
disbursement of such Sale Consideration shall be made pursuant to the terms of
the Note and the other Loan Documents. It is expressly acknowledge that the
obligations of the Companies hereunder constitute "Obligations" under (and as
defined in) the Note.

            For purposes of this Letter Agreement, the following definitions
shall apply:

            "Special Sale" shall mean the occurrence of the sale of all or
substantially all of the assets and/or capital stock of either or both of
Stylecraft and Petals.

            "Sale Consideration" shall mean the total amount of cash and the
fair market value of all securities or other property paid or payable directly
or indirectly to Interiors or any of its security holders in connection with a
Special Sale, including, without limitation, (i) amounts

<PAGE>

paid (A) pursuant to covenants not to compete, employment contracts, employee
benefit plans or other similar arrangements, (B) to holders of any warrants or
convertible securities of the Special Sale subsidiary being sold and (C) to
holders of any options or stock appreciation rights issued by the Special Sale
subsidiary being sold, whether or not vested; (ii) the total amount of
indebtedness for borrowed money or similar non-trade liabilities or obligations
(including, without limitation, pension liabilities and guarantees) of the
Special Sale subsidiary sold which are repaid, retired, extinguished or assumed
in connection with the Special Sale; and (iii) in the case of a sale of
substantially all of the assets of a Special Sale subsidiary, the total
consideration paid for such assets. Amounts paid in escrow in connection with
any Special Sale shall also be included as part of the Sale Consideration at the
time of the establishment of such escrow.

                                   **********

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<PAGE>

            If this Letter Agreement accurately sets forth your understanding
and agreement with respect to the foregoing, please acknowledge your acceptance
hereof by signing a copy of this Letter Agreement in the space provided below
and returning an executed copy to the undersigned.

                                        Very truly yours,

                                        INTERIORS INVESTORS, L.L.C.

                                        By:_____________________________________
                                        Name:
                                        Title:

ACCEPTED AND AGREED AS OF
THE ___ DAY OF MARCH 2001:

STYLECRAFT LAMPS, INC.

By:_______________________________
Name:
Title:

PETALS, INC.

By:_______________________________
Name:
Title:

ACKNOWLEDGED AS OF
THE ___ DAY OF MARCH 2001:

FOOTHILL CAPITAL CORPORATION,
as Senior Lender to the Companies

By:_______________________________
Name:
Title:

                                       3<PAGE>

                                                                     EXHIBIT 4.7

                         PARENT STOCK OPTION AGREEMENT

   This Stock Option Agreement (the "Agreement") is made and entered into as of
April 9, 2001, between Kana Communications, Inc., a Delaware corporation
("Parent"), and Broadbase Software, Inc., a Delaware corporation ("Company").

                                    RECITALS

   A. Concurrently with the execution and delivery of this Agreement, Parent,
Company and Arrow Acquisition Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), are entering into an Agreement and
Plan of Merger (the "Merger Agreement"), that provides, among other things,
upon the terms and subject to the conditions thereof, for the merger of Merger
Sub and Company (the "Merger"). Capitalized terms used in this Agreement but
not defined herein shall have the meanings ascribed to such terms in the Merger
Agreement.

   B. As a condition to Company's willingness to enter into the Merger
Agreement, Company has required that the Parent agree, and the Parent has
agreed, to grant to Company an option to acquire shares of Parent Common Stock
("Parent Shares"), upon the terms and subject to the conditions set forth
herein.

   In consideration of the foregoing and of the mutual covenants and agreements
set forth herein and in the Merger Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:

   1. Grant of Option. Parent hereby grants to Company an irrevocable option
(the "Option"), exercisable following the occurrence of an Exercise Event (as
defined in Section 2(a)), to acquire up to a number of Parent Shares equal to
19.9% of the Parent Shares issued and outstanding as of the date, if any, upon
which an Exercise Notice (as defined in Section 2(b) below) shall have been
delivered (the "Option Shares"), in the manner set forth below by paying cash
at a price of $.875 per share (the "Exercise Price"); provided, however, that
the Exercise Price will automatically, equitably and proportionally be adjusted
to reflect any subdivision, stock split, combination, reverse stock split,
stock dividend or other recapitalization affecting Parent Shares; and provided,
further, that the number of Parent Shares issuable hereunder shall be subject
to adjustment such that in no event shall the total number of Parent Shares
issuable upon exercise of the Option exceed that number of shares which is
equal to the difference of 19.9% of the Parent Shares issued and outstanding as
of the date, if any, upon which an Exercise Notice shall have been delivered
less the total number of Parent Shares, if any, issued or issuable at or prior
to the time of such exercise upon conversion of that certain Convertible
Promissory Note pursuant to that certain Revolving Loan Agreement dated the
date hereof between Parent and Company. All references in this Agreement to
Parent Shares issued to Company hereunder shall be deemed to include any
associated Rights.

                                       1

<PAGE>

   2. Exercise of Option; Maximum Proceeds.

     (a) For all purposes of this Agreement, an "Exercise Event" shall mean the
occurrence of any of (i) a Parent Triggering Event (as such term is defined in
the Merger Agreement), (ii) (A) the public announcement of an acquisition or
purchase by any person or "group" (as defined under Section 13(d) of the
Exchange Act and the rules and regulations thereunder) of more than a 30%
beneficial ownership interest in the total outstanding voting securities of
Parent or any of its subsidiaries; or (B) the public announcement or
commencement of any tender offer or exchange offer that if consummated would
result in any person or "group" beneficially owning 30% or more of the total
outstanding voting securities of Parent or any of its subsidiaries.

     (b) At any time following the occurrence of an Exercise Event, Company may
deliver to the Parent a written notice (an "Exercise Notice") specifying that it
wishes to exercise its rights to acquire Parent Shares under the Option and
close a purchase of Option Shares and specifying the total number of Option
Shares it wishes to acquire. Unless such Exercise Notice is withdrawn by
Company, the closing of a purchase of such Option Shares (a "Closing") shall
take place at the principal offices of Parent upon such date (which shall be no
earlier than three business days following the delivery of the Exercise Notice)
and at such time prior to the termination of the Option as may be designated by
Company in the Exercise Notice.

     (c) The Option shall terminate upon the earliest to occur of (i) the
Effective Time (as such term is defined in the Merger Agreement), (ii)
termination of the Merger Agreement pursuant to Section 7.1(a) thereof, (iii)
termination of the Merger Agreement pursuant to Section 7.1(i) thereof if prior
to such termination no Triggering Event shall have occurred; (iv) termination
of the Merger Agreement pursuant to Section 7.1(b), 7.1(c), 7.1(d) or 7.1(e)
thereof if prior to such termination no Exercise Event shall have occurred or
(v) 12 months following the termination of the Merger Agreement under any other
circumstances; provided, however, that if the Option is exercisable but cannot
be exercised by reason of any applicable government order or because the
waiting period related to the issuance of the Option Shares under the HSR Act
shall not have expired or been terminated, or because any other condition to
closing has not been satisfied, then the Option shall not terminate until the
tenth business day after all such impediments to exercise shall have been
removed or shall have become final and not subject to appeal, and provided,
further that if, subsequent to exercise of the Option, but prior to any other
termination of the Merger Agreement, the Merger Agreement is terminated by
Parent pursuant to Section 7.1(i) thereof, then (1) the Option, to the extent
it has not been exercised, shall terminate and (2) to the extent the Option has
been exercised, Parent may repurchase for cash all Option Shares then held by
Company at a per Option Share price equal to the Exercise Price.

     (d) If the sum of (i) any Termination Fee received by Company under
Section 7.3(c) of the Merger Agreement plus (ii) the proceeds received by
Company from any sales or other dispositions of Option Shares (including
pursuant to Parent's exercise of its rights to

                                       2

<PAGE>

purchase Option Shares under Section 7(a) and Section 10 hereof) or the Option
(including pursuant to Company's exercise of its rights to surrender the Option
pursuant to Section 9 hereof), plus (iii) any dividends or distributions
received by Company declared on Option Shares is, in the aggregate, greater than
the sum of (x) $2,500,000 plus (y) the product of (1) the Exercise Price
multiplied by (2) the number of Parent Shares purchased by Company pursuant to
the Option (the sum of clauses (x) and (y), the "Profit Cap"), then all such
proceeds received by Company in excess of the Profit Cap shall be promptly
remitted in cash by Company to Parent.

   3. Conditions to Closing. The obligation of Parent to issue Option Shares to
Company hereunder is subject to the conditions that (a) any waiting period
under the HSR Act applicable to the issuance of the Option Shares hereunder
shall have expired or been terminated; (b) all material consents, approvals,
orders or authorizations of, or registrations, declarations or filings with,
any Governmental Entity, if any, required in connection with the issuance of
the Option Shares hereunder shall have been obtained or made, as the case may
be; and (c) no preliminary or permanent injunction or other order by any court
of competent jurisdiction prohibiting or otherwise restraining such issuance
shall be in effect. It is understood and agreed that at any time during which
Company shall be entitled to deliver to Parent an Exercise Notice, the parties
will use their respective reasonable efforts to satisfy all conditions to
Closing, so that a Closing may take place as promptly as practicable.

   4. Closing. At any Closing, (a) Parent shall deliver to Company a single
certificate in definitive form representing the number of Parent Shares
designated by Company in its Exercise Notice consistent with this Agreement,
such certificate to be registered in the name of Company and to bear the legend
set forth in Section 10 hereof, against delivery of (b) payment by Company to
the Parent of the aggregate Exercise Price for the Parent Shares so designated
and being purchased by delivery of a certified check, bank check or wire
transfer of immediately available funds.

   5. Representations and Warranties of the Parent. Parent represents and
warrants to Company that (a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder; (b) the execution and delivery of this Agreement by
Parent and consummation by Parent of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
no other corporate proceedings on the part of Parent are necessary to authorize
this Agreement or any of the transactions contemplated hereby; (c) this
Agreement has been duly executed and delivered by Parent and constitutes a
legal, valid and binding obligation of Parent and, assuming this Agreement has
been duly executed and delivered by Company, is enforceable against Parent in
accordance with its terms, except as enforceability may be limited by bankruptcy
and other similar laws affecting the rights of creditors generally and general
principles of equity; (d) except for any filings, authorizations, approvals or
orders required under the applicable blue sky laws of any state, and the rules
and regulations promulgated thereunder, Parent has taken all necessary corporate
and other action to authorize and reserve for issuance and to permit it to issue
upon

                                       3

<PAGE>

exercise of the Option, and at all times from the date hereof until the
termination of the Option will have reserved for issuance, a sufficient number
of unissued Parent Shares for Company to exercise the Option in full and will
take all necessary corporate or other action to authorize and reserve for
issuance all additional Parent Shares or other securities which may be issuable
pursuant to Section 8(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement and payment
therefor by Company, will be validly issued, fully paid and nonassessable; (e)
upon delivery of the Parent Shares and any other securities to Company upon
exercise of the Option, Company will acquire such Parent Shares or other
securities free and clear of all Encumbrances, excluding those imposed by
Company; (f) the execution and delivery of this Agreement by Parent do not, and
the performance of this Agreement by Parent will not, (i) violate the
Certificate of Incorporation or Bylaws of the Parent, (ii) conflict with or
violate any order applicable to the Parent or any of its subsidiaries or by
which they or any of their material property is bound or affected or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give rise to any
right of termination, amendment, acceleration or cancellation of, or result in
the creation of a material Encumbrance on any material property or assets of
Parent or any of its subsidiaries pursuant to, any material contract or
agreement to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or any of their material property is bound or
affected, except to the extent that any such breach, default, right of
termination, amendment, acceleration or cancellation or creation of a material
Encumbrance would not prevent or materially delay the performance by Parent of
Parent's obligations under this Agreement; and (g) the execution and delivery of
this Agreement by Parent does not, and the performance of this Agreement by
Parent will not, require any consent, approval, authorization or permit of, or
filing with, or notification to, any Governmental Entity.

   6. Representations and Warranties of Company. Company represents and
warrants to Parent that (i) the execution and delivery of this Agreement by
Company and the consummation by it of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Company
and this Agreement has been duly executed and delivered by a duly authorized
officer of Company and will constitute a legal, valid and binding obligation of
Company and, assuming this Agreement has been duly executed and delivered by
Company, is enforceable against Parent in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws affecting
the rights of creditors generally and general principles of equity; and (ii)
Company is acquiring the Option, and, if and when the Company exercises the
Option, it will be acquiring the Option Shares issuable upon the exercise
thereof for its own account and not with a view to distribution or resale in
any manner which would be in violation of the Securities Act.

   7. Registration Rights.

     (a) Following the termination of the Merger Agreement, Company (sometimes
referred to herein as the "Holder") may by written notice (a "Registration
Notice") to Parent (sometimes referred to herein as the "Registrant") request
the Registrant to register

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<PAGE>

  under the Securities Act all or any part of the Option Shares acquired by the
  Holder pursuant to this Agreement (such Option Shares, together with any other
  shares of the Parent's capital stock issuable in lieu of or with respect to
  such Option Shares, the "Registrable Securities") in order to permit the
  public sale or other disposition of such shares in accordance with the
  intended method of sale or other disposition stated by the Holder; provided,
  however, that any such Registration Notice must relate to a number of shares
  equal to at least 2% of the outstanding Parent Shares and that any rights to
  require registration hereunder shall terminate with respect to any shares of
  the Parent's capital stock that may be sold pursuant to Rule 144(k) under the
  Securities Act or at such time as all of the Registrable Securities may be
  sold in any three month period pursuant to Rule 144 under the Securities Act.
  Upon receipt of a Registration Notice, the Registrant will have the option
  exercisable by written notice delivered to the Holder within ten business days
  after the receipt of the Registration Notice, irrevocably to agree to purchase
  all or any part of the Registrable Securities for cash at a price (the "Option
  Price") equal to the product of (i) the number of Registrable Securities so
  purchased and (ii) the per share average of the closing sale prices of the
  Registrant's Common Stock on the Nasdaq Stock Market for the twenty trading
  days immediately preceding the date of the Registration Notice. Any such
  purchase of Registrable Securities by the Registrant hereunder will take place
  at a closing to be held at the principal executive offices of the Registrant
  or its counsel at any reasonable date and time designated by the Registrant in
  such notice within five business days after delivery of such notice. The
  payment for the shares to be purchased will be made by delivery at the time of
  such closing of the Option Price in immediately available funds.

       (b) If the Registrant receives a Registration Notice and does not elect
  to exercise its option to purchase pursuant to Section 7(a), the Registrant
  shall use all reasonable best efforts to effect, as promptly as
  practicable, the registration under the Securities Act of the unpurchased
  Registrable Securities requested to be registered in the Registration
  Notice; provided, however, that (i) the Holder shall not be entitled to
  more than an aggregate of two effective registration statements hereunder,
  and provided further, that if the Registrant withdraws a filed registration
  statement at the request of the Holder (other than as the result of a
  material adverse change in the Registrant's business or prospects or the
  Holder's learning of new material information concerning the Registrant),
  then such filing shall be deemed to have been an effective registration for
  purposes of this clause (i), (ii) the Registrant will not be required to
  file any such registration statement or maintain its effectiveness during
  any period of time (not to exceed 45 days after a Registration Notice in
  the case of clause (A) below or 60 days after a Registration Notice in the
  case of clauses (B) and (C) below) when (A) the Registrant is in possession
  of material non-public information which it reasonably believes would be
  detrimental to be disclosed at such time and such information would have to
  be disclosed if a registration statement were filed or effective at that
  time; (B) the Registrant is required under the Securities Act to include
  audited financial statements for any period in such registration statement
  and such financial statements are not yet available for inclusion in such
  registration statement; or (C) the Registrant determines, in its good
  faith, reasonable judgment, that such registration would materially
  interfere with any financing, acquisition or other material transaction
  involving the Registrant and (iii) the Registrant will not be required to
  maintain the effectiveness of any such

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<PAGE>

  registration statement for an aggregate period greater than 180 days. If
  consummation of the sale of any Registrable Securities pursuant to a
  registration hereunder does not occur within 180 days after the filing with
  the SEC of the initial registration statement therefor, the provisions of this
  Section 7 shall again be applicable to any proposed registration. The
  Registrant shall use all reasonable best efforts to cause any Registrable
  Securities registered pursuant to this Section 7 to be qualified for sale
  under the securities or blue sky laws of such jurisdictions as the Holder may
  reasonably request and shall continue such registration or qualification in
  effect in such jurisdictions until the Holder has sold or otherwise disposed
  of all of the securities subject to the registration statement; provided,
  however, that the Registrant shall not be required to qualify to do business
  in, or consent to general service of process in, any jurisdiction by reason of
  this provision.

     (c) The registration rights set forth in this Section 7 are subject to
  the condition that the Holder shall provide the Registrant with such
  information with respect to the Holder's Registrable Securities, the plan
  for distribution thereof, and such other information with respect to the
  Holder as, in the reasonable judgment of counsel for the Registrant, is
  necessary to enable the Registrant to include in a registration statement all
  facts required to be disclosed with respect to a registration thereunder,
  including the identity of the Holder and the Holder's plan of distribution.

     (d) A registration effected under this Section 7 shall be effected at
  the Registrant's expense, except for underwriting discounts and commissions
  and the fees and expenses of counsel to the Holder, and the Registrant
  shall use all reasonable best efforts to: (i) provide such documentation
  (including certificates, opinions of counsel and "comfort" letters from
  auditors) as are customary in connection with underwritten public offerings
  and as an underwriter may reasonably require, (ii) prepare and file with
  the SEC such amendments and supplements to such registration statement and
  the prospectus used in connection with such registration statements as may
  be necessary to comply with the provisions of the Securities Act and (iii)
  furnish to the Holder and to any underwriter of such securities such number
  of copies of the final prospectus and such other documents as the Holder or
  underwriters may reasonably request. In connection with any registration
  which the Holder requests be underwritten, the Holder and the Registrant
  agree to enter into an underwriting agreement reasonably acceptable to each
  such party, in form and substance customary for transactions of this type
  with the underwriters participating in such offering.

     (e) Indemnification

     (i) The Registrant will indemnify the Holder, each of the Holder's
  directors and officers and each person who controls the Holder within the
  meaning of Section 15 of the Securities Act, and each underwriter of the
  Registrant's securities, with respect to any registration, qualification or
  compliance which has been effected pursuant to this Agreement, against all
  expenses, claims, losses, damages or liabilities (or actions in respect
  thereof), including any of the foregoing incurred in settlement of any
  action or litigation, commenced or

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<PAGE>

  threatened (each, a "Damage Claim"), arising out of or based on (A) any untrue
  statement (or alleged untrue statement) of a material fact contained in any
  registration statement, prospectus, offering circular or other document, or
  any amendment or supplement thereto, incident to any such registration,
  qualification or compliance, (B) any omission (or alleged omission) to state
  therein a material fact required to be stated therein or necessary to make the
  statements therein, in light of the circumstances in which they were made, not
  misleading, or (C) any violation by the Registrant of any rule or regulation
  promulgated under the Securities Act, the Securities Exchange Act of 1934, as
  amended, any federal or state securities law or any rule or regulation
  promulgated under any of them applicable to the Registrant (each matter in
  clause (A), (B) or (C), a "Violation"), in each case in connection with any
  such registration, qualification or compliance, and the Registrant will
  reimburse the Holder and, each of its directors and officers and each person
  who controls the Holder within the meaning of Section 15 of the Securities
  Act, and each underwriter for any legal and any other expenses reasonably
  incurred in connection with investigating, preparing or defending any such
  Damage Claim, provided that the Registrant will not be liable in any such case
  to the extent that any such Damage Claim arises out of or is based on any
  untrue statement or omission or alleged untrue statement or omission, made in
  reliance upon and in conformity with written information furnished to the
  Registrant by the Holder or director or officer or controlling person or
  underwriter seeking indemnification, and provided, further, that the indemnity
  agreement contained in this Section 7(e)(i) shall not apply to amounts paid in
  settlement of any such Damage Claim if such settlement is effected without the
  consent of the Registrant, which consent shall not be unreasonably withheld.

     (ii) The Holder will indemnify the Registrant, each of the Registrant's
  directors and officers and each underwriter of the Registrant's securities
  covered by such registration statement and each person who controls the
  Registrant within the meaning of Section 15 of the Securities Act, against
  all Damage Claims arising out of or based on any Violation in connection
  with any such registration, qualification or compliance, and will reimburse
  the Registrant, such directors, officers or control persons or underwriters
  for any legal or any other expenses reasonably incurred in connection with
  investigating, preparing or defending any such Damage Claim, in each case
  to the extent, but only to the extent, that such Violation
  occurs in such registration statement, prospectus, offering circular or
  other document in reliance upon and in conformity with written information
  furnished to the Registrant by the Holder expressly for use therein,
  provided that in no event shall any indemnity under this Section 7(e)
  exceed the gross proceeds of the offering received by the Holder and
  provided, further that the indemnity agreement contained in this Section
  7(e)(ii) shall not apply to amounts paid in settlement of any such Damage
  Claim if such settlement is effected without the consent of the Holder,
  which consent shall not be unreasonably withheld.

     (iii) Each party entitled to indemnification under this Section 7(e)
  (the "Indemnified Party") shall give notice to the party required to
  provide indemnification (the "Indemnifying Party") promptly after such
  Indemnified Party has actual knowledge of any claim as to which indemnity
  may be sought, and shall permit the Indemnifying Party to assume the
  defense of any such claim or any litigation resulting therefrom, provided
  that counsel for the

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<PAGE>

  Indemnifying Party, who shall conduct the defense of such claim or litigation,
  shall be approved by the Indemnified Party (whose approval shall not
  unreasonably be withheld), and the Indemnified Party may participate in such
  defense at such party's expense; provided, however, that the Indemnifying
  Party shall pay such expense if representation of the Indemnified Party by
  counsel retained by the Indemnifying Party would be inappropriate due to
  actual or potential differing interests between the Indemnified Party and any
  other party represented by such counsel in such proceeding, and provided,
  further that the failure of any Indemnified Party to give notice as provided
  herein shall not relieve the Indemnifying Party of its obligations under this
  Section 7(e) unless the failure to give such notice is materially prejudicial
  to an Indemnifying Party's ability to defend such action. No Indemnifying
  Party, in the defense of any such claim or litigation shall, except with the
  consent of each Indemnified Party, consent to entry of any judgment or enter
  into any settlement which does not include as an unconditional term thereof
  the giving by the claimant or plaintiff to such Indemnified Party of a release
  from all liability in respect to such claim or litigation. No Indemnifying
  Party shall be required to indemnify any Indemnified Party with respect to any
  settlement entered into without such Indemnifying Party's prior consent (which
  shall not be unreasonably withheld).

     (iv) If the indemnification provided for in this Section 7(e) is held by
  a court of competent jurisdiction to be unavailable to an Indemnified Party
  with respect to any Damage Claim, then the Indemnifying Party, in lieu of
  indemnifying the Indemnified Party, shall contribute to the amount paid or
  payable by such Indemnified Party with respect to such Damage Claim in the
  proportion that is appropriate to reflect the relative fault of the
  Indemnifying Party and the Indemnified Party in connection with the
  statements or omissions that resulted in such Damage Claim, as well as any
  other relevant equitable considerations. The relative fault of the
  Indemnifying Party and the Indemnified Party shall be determined by
  reference to, among other things, whether the untrue or alleged untrue
  statement of material fact or the omission to state a material fact relates
  to information supplied by the Indemnifying Party or by the Indemnified
  Party, and the parties' relative intent, knowledge, access to information
  and opportunity to correct or prevent such statement or omission. In any
  such case, (A) the Holder will not be required to contribute any amount in
  excess of the aggregate public offering price of all such Registrable
  Securities offered and sold by the Holder pursuant to such registration
  statement; and (B) no person or entity guilty of fraudulent
  misrepresentation (within the meaning of Section 11(f) of the Securities
  Act) will be entitled to contribution from any person or entity who was not
  guilty of such fraudulent misrepresentation.

   8. Adjustment Upon Changes in Capitalization; Rights Plans

     (a) In the event of any change in the Parent Shares by reason of stock
  dividends, stock splits, reverse stock splits, mergers (other than the
  Merger), recapitalizations, combinations, exchanges of shares and the like,
  the type and number of shares or securities subject to the Option shall be
  adjusted appropriately, and proper provision shall be made in the
  agreements governing such transaction so that Company shall receive, upon
  exercise of the Option, the number and class of shares or other securities
  or property that Company would have

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<PAGE>

received in respect of the Parent Shares if the Option had been exercised
immediately prior to such event or the record date therefor, as applicable.

     (b) Prior to such time as the Option is terminated, and at any time after
the Option is exercised (in whole or in part, if at all), the Parent shall not
(i) adopt (nor permit the adoption of) a new stockholders rights plan that
contains provisions for the distribution or exercise of rights thereunder as a
result of Company or any affiliate or transferee being the beneficial owner of
shares of the Parent by virtue of the Option being exercisable or having been
exercised (or as a result of beneficially owning shares issuable in respect of
any Option Shares), or (ii) take any other action which would prevent or
disable Company from exercising its rights under this Agreement or enjoying the
full rights and privileges possessed by other holders of Parent Shares
generally with respect to the Option Shares obtained by the Holder upon
exercise of the Option.

   9. Repurchase of Shares. Parent shall have the right to purchase for cash
(the "Repurchase Right") all, but not less than all, of the Option Shares then
beneficially owned by Company at an aggregate price for all such shares
(regardless of the number of such shares) equal to the Adjusted Profit Cap.
Parent's right to exercise the Repurchase Right shall expire on the twentieth
business day following the two year anniversary of the termination of the
Merger (the "Merger Termination Date"). In the event Parent wishes to exercise
the Repurchase Right, Parent shall send a written notice to Company specifying
a date (not later than ten business days and not earlier than the second
business day following the date such notice is given) for the closing of such
repurchase (the "Repurchase Notice"), provided, however that Parent may not
repurchase any Option Shares hereunder prior to the date that is one calendar
year following the date on which the Merger Agreement is terminated. The
closing of the repurchase of the Option Shares shall take place at the
principal offices of Parent upon such specified date. Upon exercise of Parent's
right to repurchase all outstanding Option Shares and full payment therefor to
Company pursuant to this Section 9, any and all right of Company to future
exercises of the Option shall be terminated. Notwithstanding anything to the
contrary herein, if application of the Adjusted Profit Cap formula below yields
a number that is less than zero, Parent may exercise its Repurchase Right as
provided in this Section 9, and upon such exercise, Company shall deliver all
Option Shares it holds to Parent for cancellation, and neither Company nor
Parent shall pay each other any amount in connection with such exercise of the
Repurchase Right.

   For the purposes of this Agreement, the "Adjusted Profit Cap" means the
difference of (i) the Profit Cap minus (ii) the sum of (A) any Termination Fee
received by Company under Section 7.3(c) of the Merger Agreement plus (B) the
proceeds received by Company for any sales or other dispositions of Option
Shares (including pursuant to Parent's exercise of its rights to purchase
Option Shares under Section 7(a) hereof) or the Option, and any dividends or
distributions received by Company declared on Option Shares, in each case,
through the date of the closing of the repurchase under this Section 9;
provided that the Adjusted Profit Cap shall never be less than zero.

                                       9

<PAGE>

   10. Restrictive Legends. Each certificate representing Option Shares issued
to Company hereunder (other than certificates representing shares sold in a
registered public offering pursuant to Section 7) shall include a legend in
substantially the following form:

  THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
  UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
  SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
  AVAILABLE.

   11. Listing. The Parent, upon the request of Company, shall promptly file an
application to list the Parent Shares to be acquired upon exercise of the
Option for quotation on the Nasdaq Stock Market and shall use its reasonable
efforts to obtain approval of such listing as soon as practicable.

   12. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. Except as set forth in Section 7, nothing contained in this Agreement,
express or implied, is intended to confer upon any person other than the
parties hereto and their respective successors and permitted assigns any rights
or remedies of any nature whatsoever by reason of this Agreement.

   13. Specific Performance; Fees.

     (a) The parties hereto recognize and agree that if for any reason any of
the provisions of this Agreement are not performed in accordance with their
specific terms or are otherwise breached, immediate and irreparable harm or
injury would be caused for which money damages would not be an adequate remedy.
Accordingly, each party agrees that in addition to other remedies the other
party shall be entitled to an injunction restraining any violation or
threatened violation of the provisions of this Agreement or the right to
enforce any of the covenants or agreements set forth herein by specific
performance. In the event that any action shall be brought in equity to enforce
the provisions of the Agreement, neither party will allege, and each party
hereby waives the defense, that there is an adequate remedy at law.

     (b) If any action, suit or other proceeding (whether at law, in equity or
otherwise) is instituted concerning or arising out of this Agreement or any
transaction contemplated hereunder, the prevailing party shall recover, in
addition to any other remedy granted to such party therein, all such party's
costs and attorneys fees incurred in connection with the prosecution or defense
of such action, suit or other proceeding.

   14. Entire Agreement. This Agreement and the Merger Agreement (including the
appendices and exhibits thereto) constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.

                                      10

<PAGE>

   15. Further Assurances. Each party will execute and deliver all such further
documents and instruments and take all such further action as may be necessary
in order to consummate the transactions contemplated hereby.

   16. Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.

   17. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given upon delivery either personally or by
commercial delivery service, or sent via telecopy (receipt confirmed) to the
parties at the following addresses or telecopy numbers (or at such other
address or telecopy numbers for a party as shall be specified by like notice):

    (a) if to Parent or Merger Sub, to:

      Kana Communications, Inc.
      740 Bay Road
      Redwood City, CA 94063
      Attention: Jay Wood
      Facsimile No.: (650) 474-8506

      with a copy to:

      Brobeck, Phleger & Harrison LLP
      Two Embarcadero Place
      2200 Geng Road
      Palo Alto, CA 94303
      Attention: David Makarechian, Esq.
      Facsimile No.: (650) 496-2885

    (b) if to Company, to:

      Broadbase Software, Inc.
      181 Constitution Drive
      Menlo Park, CA 94025
      Attention: Chuck Bay
      Facsimile No.: (650) 614-8301

                                      11

<PAGE>

      with a copy to:

      Fenwick & West LLP
      275 Battery Street, Suite 1500
      San Francisco, CA 94111
      Attention: David K. Michaels, Esq.

      Facsimile No.: (415) 281-1350

   18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.

   19. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

   20. Expenses. Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.

   21. Amendments; Waiver. This Agreement may be amended by the parties hereto
and the terms and conditions hereof may be waived only by an instrument in
writing signed on behalf of each of the parties hereto, or, in the case of a
waiver, by an instrument signed on behalf of the party waiving compliance.

   22. Assignment. Neither of the parties hereto may sell, transfer, assign or
otherwise dispose of any of its rights or obligations under this Agreement or
the Option created hereunder to any other person, without the express written
consent of the other party, except that the rights and obligations hereunder
shall inure to the benefit of and be binding upon any successor or permitted
assign of a party hereto. No consent shall be required in connection with a
merger, consolidation, reorganization, sale of substantially all assets or
similar transaction with respect to a party hereto. Any purported assignment in
violation of this Section shall be void.

   23. Public Announcement. Parent shall consult with Company and Company shall
consult with Parent before issuing any press release with respect to the
initial announcement of this Agreement or the transactions contemplated hereby
and neither party shall issue any such press release prior to such consultation
except as may be required by law.

   24. Waiver Of Jury Trial. EACH OF PARENT AND COMPANY HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE

                                      12

<PAGE>

ACTIONS OF PARENT OR COMPANY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.

                                   * * * * *

                                      13
<PAGE>

   In Witness Whereof, the parties hereto have caused this Stock Option
Agreement to be executed by their duly authorized respective officers as of the
date first written above.

                                          Broadbase Software, Inc

                                          By: /s/ Chuck Bay
                                            ------------------------------
                                          Name: Chuck Bay
                                          Title: Chief Executive Officer

                                          Kana Communications, Inc.

                                          By: /s/ James C. Wood
                                            ------------------------------
                                          Name: James C. Wood
                                          Title: Chief Executive Officer

                                      14

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